Reuters -Predictions-2024

PARADIGM
DRIFT
PREDICTIONS 2024
2 REUTERS BREAKINGVIEWS | Contents
CONTENTS
3 INTRODUCTION 38 FALLING FLAT

5 LOOKING AHEAD 39 Polls may imperil emerging Asia’s policy stability
6 Jay Powell could land on the ballot in 2024 41 Artificial intelligence will embark on a data dash
8 Backlogged M&A pipeline will burst 43 China’s automakers will defy the great uncoupling
10 China’s Huawei could be the surprise IPO of 2024 45 Deflation will help big grocers gobble up minnows
12 Big companies will raid government for future CEOs 47 EU tech rules will create clicks, not competition
14 Saudi’s best foreign investment will be in Gaza 49 Amazon’s space dreams deserve to be grounded
16 Ahmedabad will be India’s next Silicon Valley 50 Dear Chancellor: Inflation will fall… when it falls
18 Aussie tycoon will blaze new green activist trail
52 BACKLASH
20 Gen Alpha will tire of living online
53 The United States will go from MAGA to MAWA
21 COMEBACKS 56 Kim Kardashian will be kicked off Instagram
22 Mega-bank M&A goes from impossible to imaginable 58 Goldman’s partnership is too much of a good thing
24 Biofuels comeback will give West a rare energy win 60 Blockchain’s rebirth will pass United States by
26 Toyota will engineer a half-electric renaissance 62 Green backlash will spread to European Parliament
28 Convertibles will be 2024’s hot financial model 64 Soccer will inch towards financial rationality
30 Swiss pharma mega-deal has healthy prognosis 66 ‘Polluter pays’ doctrine will take on new meaning
32 Disney’s 2024 lifeline leads to Tim Cook 68 U.S. defense minnows will storm the barricades
34 Microsoft will finally make its mark in mobile
70 PICKING UP THE PIECES
36 StanChart M&A theory will finally become reality
71 Fixing Intel ends with taking it apart
72 Beijing will build safety net around housing hole
75 Sony Activision riposte will involve mobile gaming
77 BP and Equinor will find common ground
79 Ozempic overshoot will plump up bargain-hunters
81 The Li clan will deal their way out of value trap
83 Green investors will learn the art of stockpicking
86 Stellantis will cruise with GM and Ford
88 Altice’s best hope will be a Middle East lifeline
90 Restaurant deals will be back on the menu in 2024
93 ACKNOWLEDGEMENTS
93 ABOUT US
3 REUTERS BREAKINGVIEWS | Introduction
RIVAL NARRATIVES
WILL BATTLE FOR
SUPREMACY IN 2024
INTRODUCTION BY PETER THAL LARSEN, GLOBAL EDITOR
As inflation peaks, war rages and trade year ahead. As with previous editions, the goal is not
forecasting accuracy, but to offer a new way of thinking
conflicts harden, new ways of thinking about the forces with which companies and people
about how and why the world has will grapple. Last year’s effort produced some hits,
changed are emerging. The lessons as China and the West squabbled over metals and
inflation challenged conscious consumers, as well as
drawn by voters, central banks, tech titans
some misses: Microsoft did not buy Netflix; the United
and bureaucrats will shape economies, Arab Emirates is still a member of OPEC.
companies and markets for years to come.
Any attempt to peer into the future starts with
It has been more than six decades since Thomas Kuhn acknowledging the range of paradigms vying for supremacy.
first coined the term “paradigm shift”. Yet the process These include rival political ideologies, which will clash in
the American historian described, where accumulating looming elections in the United States, the United Kingdom,
contradictions in and violations of old theories lead India, Indonesia, and other democracies in the coming
to them being painfully overthrown, remains relevant 12 months. They will do so as political leaders increasingly
today. As 2024 gets underway, the consequences of frame the contests as existential decisions, the outcome
an inflationary overshoot, heightening trade conflict of which they may not deem legitimate. Indeed, former
and war pose a challenge to established ways of U.S. President Donald Trump has embarked on the 2024
thinking about the world. That leaves fields from central presidential campaign with many supporters still refusing
banking to technology, industrial policy, and energy to accept that he lost the last one.
in an uncomfortable state of flux. The lessons their
practitioners draw in the coming 12 months will influence Central banks may seem bastions of stability by comparison.
economies, companies and markets for years to come. Yet U.S. Federal Reserve boss Jerome Powell and his
opposite number at the European Central Bank, Christine
Kuhn’s thinking, laid out in the seminal “The Structure Lagarde, are grappling with deep uncertainties. After rapidly
of Scientific Revolutions”, focused on the messy, hiking interest rates in response to an inflationary spike
confrontational process by which scientific theory many policymakers believed was temporary, the theoretical
changes to accommodate disquieting discoveries. foundations of monetary policy are once again up for grabs.
While the concept of paradigm shifts has been widely The risks of another mistake are high, potentially putting
applied – to the point of misuse – in other fields, it seems central banks in the political firing line.
appropriate when considering the many uncertainties
in confronting today’s changed world. THE RISKS OF ANOTHER MISTAKE
This is the backdrop against which Breakingviews ARE HIGH, POTENTIALLY PUTTING
columnists have embarked on their annual attempt to CENTRAL BANKS IN THE POLITICAL
guide readers through the trends that will shape the FIRING LINE
4 REUTERS BREAKINGVIEWS | Introduction
The new reality of higher interest rates raises doubts about All these new narratives are not only in competition with
the sustainability of sovereign debt, pressuring political old ideas; at times they are also in conflict with each
leaders to re-examine commitments on spending and other. The U.S. push to get drivers out of gas-guzzling
taxation. That does not mean, however, that they will vehicles and into battery-powered rides, for example,
retreat to laissez-faire passivity. Bureaucrats are ever more may be incompatible with becoming less dependent on
willing to meddle in cross-border trade, wield financial China. And green innovations that previously seemed
sanctions, block mergers, and lure businesses with tax dead ends, like biofuels, could stage a comeback.
breaks and subsidies. Companies may respond by luring
more of them into the executive suite. UNEXPECTED EVENTS WILL
That might dampen corporate animal spirits. HAVE THE POTENTIAL TO
Nevertheless, after correctly anticipating subdued deal DERAIL EVEN THE MOST
volumes in 2023, our columnists have a hunch mergers COMPELLING PARADIGMS
and acquisitions are set for a revival. European banks,
Hong Kong tycoon Li Ka-shing, and the British oil giant The global pandemic and war in Ukraine have taught
BP are among those that have good reasons to consider the world about the potential for nasty surprises. Even
corporate activity in the coming year. the most perceptive decision-makers can still be caught
off-guard. “The Middle East is quieter today than it has
Meanwhile, the arrival of self-teaching systems
been in decades,” Jake Sullivan, President Joe Biden’s
powered by generative artificial intelligence threatens
national security adviser, declared in late September,
consequences far beyond the technology industry. Clever
barely a week before combatants from Hamas attacked
chatbots could enhance productivity – while destroying
Israel, killing around 1,200 people and sparking Israel’s
jobs. The race for AI supremacy will spark a scramble for
deadly invasion of Gaza. As in previous years, unexpected
reliable data, while governments will struggle to produce
events will have the potential to derail even the most
appropriate regulations to govern the potential spread
compelling paradigms.
of dangerous misinformation. Young people may simply
respond by spending less time online. First published January 2024
Deer stags clash antlers in Richmond Park, London, Britain, Dec. 1, 2022. REUTERS/Toby Melville
CHAPTER 1
LOOKING
AHEAD
6 REUTERS BREAKINGVIEWS | Looking ahead
JAY POWELL COULD

LAND ON THE BALLOT
IN 2024
BY JOHN FOLEY
Central banks’ fight against inflation Start with the United States. There, President Joe Biden is
likely to go up in November against Donald Trump, who,
may produce slower growth, joblessness while president, suggested Federal Reserve Chair Jay
and recession in the U.S., Europe and Powell was an American “enemy” for not slashing interest
the UK, just as elections loom. The Fed rates. Trump’s attack didn’t go far. Within a few months
Covid-19 had hit, leading the Fed to slash rates to zero
chief and peers argue their mandate
anyway. Powell is good at politics, too: his confirmation
is to slay high prices, not to appease to a second term in 2022 won the support of 80 out of
voters. They shouldn’t assume it will the 99 senators who voted.
always be so. This time, though, the Fed is unusually exposed to
CONFLICTS OF INTEREST mud-slinging. It messed up on inflation, delaying
Central bank independence has an irresistible appeal. When interest-rate hikes too long and then slamming on the
monetary policy is insulated from government, vote-seeking brakes. The coming year may bring a so-called soft
politicians can’t interfere to get a short-term economic fillip. landing, where inflation and rates both ease gently.
As elections loom in 2024 in countries like the U.S. and the But if instead prices keep rising too fast and rates stay
UK, that logic may come in for a stress test. high, millions of Americans – who currently sit on a
record $1 trillion of credit-card debt – will suffer.
US CREDIT CARD LENDING HAS SURPASSED ITS PRE-COVID TREND
Note: Credit card loans held by US commercial banks

Chinese Source:
battery Federal
maker CATL’s
ReserveChief Executive
| J. Foley Robin Zeng
| Breakingviews attends
| Dec. a news conference in Berlin, Germany, July 9, 2018. REUTERS/Hannibal Hanschke
4, 2023
As for European Central Bank President Christine

THE FED IS UNUSUALLY Lagarde, she doesn’t answer to any one country –
EXPOSED TO MUD-SLINGING although the ECB’s upper echelons are replete with
often-squabbling representatives from national central
The problem is that the Fed has also crept into areas banks. But with elections in Belgium, Austria, Portugal
that – in the United States at least – are political hot and the European Parliament, among others, recession
potatoes. One is Powell’s experiment with “inclusive” risk and durably high interest rates could make Lagarde
monetary policy to maximise employment for all a target for discontent.
Americans rather than mainly white ones. Another is
Some things should give the central bankers – or at
climate change: big U.S. banks are being put through
least central banks – comfort. Reversing the trend
dry-run climate stress tests, which provoked howls from
towards independence will be hard and require onerous
some conservative lawmakers. Big banks are cynically
lawmaking. Whoever takes the White House can, in
stoking the fire, claiming that loathed new capital
any case, nominate a new Fed chief in 2026. Besides,
regulations could make prices of everything from plane
preserving an autonomous central bank gives lawmakers
tickets to mortgages more expensive.
on both sides someone else to blame if things go wrong
It’s not just the U.S. where elections will bring anxiety. Bank on their watch. Political hopefuls may have harsh words
of England Governor Andrew Bailey also got inflation wrong for Powell and peers, but they know when they’re on to
– the rate of price increases in the UK hit 11% in October a good thing.
2022. Prime Minister Rishi Sunak has refrained from First published January 2024
criticising the central bank, but Parliament’s upper chamber
recommended in November that its mandate be “pruned”.
U.S. Federal Reserve Chairman Jerome Powell addresses a press conference in Washington, U.S., Sept. 20, 2023. REUTERS/Evelyn Hockstein
BACKLOGGED M&A
PIPELINE WILL BURST
BY JEFFREY GOLDFARB
Even normally chipper bankers are The slowdown in M&A activity has darkened the mood
of usually chipper financial advisers. Even mega-mergers
wary as merger activity heads for a unveiled by oil giants Exxon Mobil and Chevron in the
second straight drop from its $5.7 fourth quarter, worth a combined $113 billion, haven’t
trillion peak in 2021. And yet stabilizing boosted spirits much. Globally, companies notched $2.6
trillion of deals by the end of November, putting volume
capital costs, bulging cash reserves and
on track for the lowest full-year total since 2014 and well
adjusting valuation mindsets should below 2021’s $5.7 trillion peak.
help spark enough pressure to ignite
It’s no wonder deal consiglieri have been
a deals resurgence. uncharacteristically cautious. Jim Esposito, the co-head
JOINING FORCES of global banking and markets at Goldman Sachs,
Investment bankers ordered back to the office in 2023 recently told Reuters he expects M&A to be a “little
could just as easily have twiddled their thumbs at bit less robust” over the medium term. Subdued CEO
home. In 2024, however, they should be able to start confidence levels back him up.
accumulating frequent-flyer miles again, as a growing list
of deals sketched on paper finally get put into action.
MERGERS-TO-MARKET-CAP IS AT A DECADE LOW
Note: Percentages shown are not positioned to exact scale

Sources: SIFMA, LSEG | A. F. Alias and J. Goldfarb | Breakingviews | Dec. 7, 2023
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At a certain point, however, pressure simply squeezes too the expense involved. Microsoft’s ability to overcome
hard. In the 40 years LSEG has kept records, the value regulatory opposition to owning Activision Blizzard,
of mergers and acquisitions has never dropped three for one, may embolden other hesitant acquirers to dust
years in a row. Moreover, deal volume from 2014 to 2022 off shelved strategies.
averaged 4.5% of worldwide listed equity value without
This stability should help narrow the previously yawning
ever dipping below 3%; in 2023, it was 2.4%. A reversion
gap in valuation perspectives held by sellers and buyers.
to the mean would yield some $4.7 trillion of deals.
An abundance of cash doesn’t hurt either. Members of
the S&P 500 Index – excluding those in finance, utilities,
A REVERSION TO THE MEAN property and transportation – were sitting on some $1.8
WOULD YIELD SOME $4.7 TRILLION trillion of it, the same as at the end of 2021, according
OF DEALS to S&P Dow Jones Indices. The clock is also ticking for
buyout firms and their record $2.5 trillion of firepower.
More practically, with the U.S. Federal Reserve ending
There’s also some strategic urgency to spend. Governments
its cycle of rapidly raising interest rates, capital is easier
pursuing decarbonization and supply-chain restructuring
to come by and its cost easier to assess. A coinciding
should ignite investor enthusiasm in those trending areas.
recovery in public stock valuations makes equity a more
Striking deals in 2024 will require extra courage and
valuable currency with which to shop. And dealmakers
creativity, but there’s no shortage of inspiration.
have had time to adjust to the new normal of aggressive
trustbusting, both in terms of its legal limitations and First published December 2023
A man in a suit talks on the phone as he walks on Wall Street, in New York City, U.S., May 3, 2018. REUTERS/Brendan McDermid
CHINA’S HUAWEI COULD BE

THE SURPRISE IPO OF 2024
BY CHAN KA SING
Ren Zhengfei has long insisted the To achieve the goal of building a “great modern socialist
country”, President Xi Jinping has repeatedly stressed the
telecoms giant and chip designer he importance of innovation and technological self-sufficiency.
founded will never go public, but the Huawei can help Beijing deliver on both fronts. The
company is now central to Beijing’s smartphone it released in September was a surprisingly
sophisticated product from a company subject to American
technology ambitions, which require
sanctions. The device is full of Chinese-made components
heavy funding. A Huawei listing would and is powered by an advanced semiconductor believed
also breathe life into China’s ailing to be made by Shanghai’s Semiconductor Manufacturing
stock market. International Corp (SMIC).
NEVER SAY NEVER Yet investing in research and development in the face of
Huawei’s CEO Ren Zhengfei always insisted that the U.S. restrictions is taking its toll. Huawei’s operating profit
telecoms giant he founded will never become a publicly margin has shrunk from over 10% in 2018 to less than 7%
traded company and that it would instead focus on in 2022, when annual net profit fell to just $5.1 billion. On
working for the bigger ideals of society. An initial public the same 25 times trailing earnings multiple as iPhone
offering could be on the horizon if China’s national maker Apple, Huawei would be worth $128 billion.
interest is at stake, however.
HUAWEI COULD BE ONE OF CHINA’S MOST VALUABLE COMPANIES
Note: Data for largest mainland China-headquartered listed companies as of Dec. 4, 2023
Source: LSEG | Chan K. S. | Breakingviews | Dec. 4, 2023
year later, it was worth about $30 billion by December

INVESTING IN RESEARCH AND 2023. A Huawei IPO might receive a similarly euphoric
DEVELOPMENT IN THE FACE OF U.S. reception and inject life into China’s stock market if mom-
RESTRICTIONS IS TAKING ITS TOLL and-pop traders believe the company will receive state
backing and win market share from global rivals.
The company could be worth much more than that, In a letter to staff in 2021, Ren said that Huawei’s
though. Ni Guangnan, ex-chief technology officer at businesses could “gradually enter the market in the
Lenovo and longtime proponent of China developing future”. Handset maker Honor, a sub-brand Huawei
its own processing chips, opined in 2019 that Huawei sold to a consortium led by a Shenzhen state firm in
could be worth $1.3 trillion. He didn’t provide a detailed 2020, in November articulated a plan to go public. The
explanation, but Apple’s market capitalisation had just same month Huawei said it will move core technologies
topped $1 trillion. in its smart car unit to a joint venture owned 40% by
Chinese investors could help Huawei’s stock soar. They are automaker Chongqing Changan Automobile. Huawei is
renowned for their enthusiasm in chasing hot offerings. busy remaking itself and pushing boundaries. An IPO
SMIC was worth less than $6 billion upon its delisting from would fit the bill too.
New York in 2019. After floating its shares in Shanghai a First published December 2023
A man checks Huawei’s Mate 60 series smartphones displayed at a Huawei store in Shanghai, China, Sept. 8, 2023. REUTERS/Aly Song
BIG COMPANIES WILL

RAID GOVERNMENT
FOR FUTURE CEOS
BY PETER THAL LARSEN
There’s a long history of businesspeople

UNTIL NOW, THE REVOLVING
going into politics. Now sanctions and
DOOR BETWEEN BUSINESS AND
subsidies are showing boardrooms POLITICS HAS SPUN MOSTLY IN
the value of diplomatic skills. Lazard ONE DIRECTION
CEO Peter Orszag and Legal & General
Chairman John Kingman worked in Until now, the revolving door between business and
politics has spun mostly in one direction, propelling
government. Others will follow through corporate executives into public office. In 2006, Hank
the revolving door. Paulson left the top job at Goldman Sachs to become
U.S. Treasury Secretary. His two predecessors in the
REVOLVING SCORE
administration of President George W. Bush also
Big companies will seek out CEOs with government
previously ran large companies. Former Standard
experience in 2024. As states play a larger role in
Chartered boss Mervyn Davies became a UK trade
determining the fate of businesses, boardrooms are
minister in 2009; HSBC Chairman Stephen Green made
waking up to the value of diplomatic skills. Yet relatively
a similar switch a year later. The former CEO of Air New
few occupants of the corner office have first-hand
Zealand, Christopher Luxon, is now the Antipodean
knowledge of government. That will change.
nation’s prime minister.
GLOBAL CEO TURNOVER HAS REMAINED BROADLY STABLE
Note: Outgoing CEOs from 1,822 global companies

Source: Russell Reynolds Associates | P. Thal Larsen | Breakingviews | Dec. 4, 2023
These days, however, governments are more likely to of the U.S. Office of Management and Budget before
shape corporate fates. War has disrupted supply chains. moving into investment banking. In Britain, several officials
Financial sanctions and trade restrictions, such as those who helped rescue the banking system in 2008 now hold
the U.S. imposed on sales of semiconductors to China, senior private sector roles. John Kingman, formerly a
can place large customers and entire markets off-limits high-ranking UK civil servant, is chairman of insurer Legal
at the stroke of a bureaucratic pen. CEOs surveyed by & General; Shriti Vadera, who served in Prime Minister
KPMG in mid-2023 flagged geopolitics and political Gordon Brown’s government, chairs Prudential.
uncertainty as the biggest risks to growth.
In some countries it’s more common for leaders to move
On the plus side, subsidies and tax breaks such as those between ministries and management roles. Thierry
unleashed by President Joe Biden have turbocharged Breton, currently the European Union’s Internal Market
investment in chips and electric vehicles. CEOs who Commissioner, served as French finance minister in
can navigate government decision-making stand a between stints running France Telecom and consulting
better chance of avoiding pitfalls and pocketing these firm Atos. Donald Rumsfeld, who was U.S. Defense
windfalls. Meanwhile, corporate leaders are under Secretary in the 1970s, subsequently worked as CEO
increasing pressure to stake out public positions and chairman of several large companies before
on social and political issues, from abortion to the returning to the Department of Defense in 2001.
conflict in Gaza. This requires executives capable
Yet making the switch from actual politics to office
of communicating with large audiences.
politics remains tricky. Former officials who attempt
Many companies recruit retired officials to help steer the transition have to quickly master corporate skills,
them through the bureaucratic maze, or seek support from setting strategy to financial planning. Even so,
from lobbying firms and geopolitical advisory outfits. Yet as governments exert more power, leaders with a
senior leaders with direct experience of the workings of detailed grasp of politics are becoming more valuable.
government are also rising to high corporate office. Peter Big companies will hire more of them in 2024.
Orszag, who recently took charge of Lazard, was director
First published December 2023
Peter Orszag, CEO of Lazard, speaks at the ReutersNEXT Newsmaker event in New York City, U.S., Nov. 9, 2023. REUTERS/Brendan McDermid
SAUDI’S BEST
FOREIGN INVESTMENT
WILL BE IN GAZA
BY GEORGE HAY
Saudi Arabia’s Crown Prince Mohammed bin Salman speaks with the Fox News channel, in an interview aired Sept. 21, 2023, in Neom, Saudi Arabia. Saudi Press Agency/Handout via REUTERS
The kingdom is known for flashy punts peace talks. Gulf states, the Carnegie Endowment for
International Peace theorises, could promote a new
on Western sports and blue chips. version of the 2002 Arab Peace Initiative. The first
But its real need is foreign cash to incarnation saw major Arab states offer peace and
help diversify away from oil. If Crown normalised relations with Israel in return for measures
that included the establishment of a sovereign
Prince Mohammed bin Salman
Palestinian state. In 2024 Palestinians could be offered,
were to use Saudi money to help among other things, financing and diplomatic assistance
Palestinians rebuild post-war, U.S. to recover.
goodwill may prompt an FDI spike. It’s unclear who would lead a post-war Palestine, so such
FORTUNES OF WAR an outcome is fraught with difficulties. But it would suit
The war in Gaza leaves Mohammed bin Salman with a MbS, who was already pursuing normalisation talks with
choice. In 2024, Saudi Arabia’s crown prince could keep Israel before Oct. 7. His Vision 2030 scheme to pivot
using the kingdom’s $700 billion Public Investment Saudi’s economy away from oil requires $100 billion of
Fund to buy Western corporate and sporting trinkets. foreign direct investment inflows annually by 2030, but in
A more far-sighted policy would see him help finance 2022 the kingdom only managed $33 billion, even after
the reconstruction of Palestine. overhauling its FDI methodology. Securing what’s needed
requires a quieter Middle East, not a war-torn one.
A few months into the war, that might sound
implausible. The bloody invasion of Gaza that followed
SECURING WHAT’S NEEDED
Hamas’ murder of around 1,200 people in Israel on
REQUIRES A QUIETER MIDDLE EAST,
Oct. 7 had as of early December killed over 14,000
Palestinians. A November summit of Arab and Islamic
NOT A WAR-TORN ONE
leaders, chaired by MbS in Riyadh, castigated Israel for
“war crimes”. Prime Minister Benjamin Netanyahu said Despite the $120 billion in extra net oil export revenues
in early November he wanted Israel to control a post- Saudi received in 2022 relative to 2021, Riyadh doesn’t
war Gaza, increasing the risk that a weakened Hamas have limitless resources to throw at Gaza. The kingdom
or a different extremist group maintains the support may run budget deficits until 2026, Capital Economics
of significant numbers of Palestinians. If Donald Trump flags. If oil prices slump, big diversification projects like
gets re-elected as U.S. president in 2024, his zealous MbS’s flagship Red Sea city Neom might face capital
support for Israel could polarise the situation further. spending cuts.
Yet it’s possible to imagine a better scenario. If Israel Yet one key reason why FDI inflows into Saudi have
ditches Netanyahu’s discredited far-right administration, stuttered is foreign investors’ misgivings about MbS
a more moderate government might reopen Palestinian himself following the murder of journalist Jamal
Khashoggi by Saudi agents in 2018. If the Saudi
leader were to host a major Arab peace conference in
SAUDI FDI FLOWS LAG THE KINGDOM’S 2030 GOAL
Riyadh and offer billions of dollars in scarce resources
in reconstruction aid, he could build a more positive
reputation. Western leaders and investors might see
him more as a statesman and less as a loose cannon.
That would still be a risky use of Saudi resources. But

plenty of PIF punts, like its $45 billion bet on the SoftBank
Vision Fund, went wrong without yielding any political
benefits. If U.S. and European investors became more
sanguine about heading to Riyadh, it could be the best
investment MbS ever made.
Note: All figures in USD. Saudi Arabia Foreign Direct Investment data updated in November 2023. First published December 2023
Previous 2022 FDI inflow figure was $7.9 bln
Source: Saudi Arabia Ministry of Investment | G. Hay | Breakingviews | Nov. 28, 2023
AHMEDABAD WILL BE
INDIA’S NEXT SILICON VALLEY
BY PRANAV KIRAN
So will Mysuru, Jaipur and Coimbatore. Fortune 500 companies from Walmart to Germany’s Bosch
are just as likely to consider India when hiring artificial
Global firms are leaning on employees intelligence experts as they are for back-office roles.
in India to execute more complex tasks. Increasingly, firms are leaning on employees in the country
They’ll find a cheaper, reliable workforce to execute more complex engineering and research tasks.
beyond the country’s traditional tech For instance, engineers at Boeing’s hub in Bengaluru used
hubs. The rise of AI will see more cities machine learning to help upgrade wire designs on aircraft
become the workplaces of the world. including the Chinook helicopter to cut down on design
time. The company is investing $200 million in a new
BANGALORED office near the city’s airport. Such global capability centres
Global firms are realising that white-collar jobs can be (GCCs) will employ about 4.5 million workers in India by
done from anywhere, so they’re doubling down on India, 2030, more than double the current number, EY estimates.
where labour costs are a fraction of what they are in
the West. They will build a cheap and reliable workforce CENTRES LIKE BENGALURU ARE
outside the traditional technology hubs of Bengaluru
PLAGUED WITH INFRASTRUCTURE
and Hyderabad. As a result, India will have many
PROBLEMS AND ARE GETTING
Silicon Valleys.
PRICIER TO OPERATE IN
GLOBAL FIRMS ARE GROWING THEIR INDIA WORKFORCES
Note: Figures for 2023-2030 are estimates

Source: EY - Future of GCCs in India | P. Kiran | Breakingviews | Dec. 4, 2023
However, centres like Bengaluru are plagued with While cities like Austin and Miami in the United States
infrastructure problems and are getting pricier to operate have struggled to replicate the success of Silicon Valley,
in. Currently, a third of all staff at India’s GCCs are based India won’t face the same problem. Nearly 75% of the
in just the one city, according to research from consulting country’s top 100 engineering schools, like the alma
firm Zinnov. These employees also tend not to stick maters of Microsoft and Alphabet bosses Satya Nadella
around in their jobs for very long. and Sundar Pichai, are in smaller towns anyway. Indian
workers are young and willing to move, so companies can
Record demand by global companies for cloud services
build offices in far-flung places and the talent will follow.
during the pandemic coincided with high-paying venture
capital-funded startups poaching workers. Attrition Firms are creating positions at a rapid pace – more
at India’s top three IT services firms including Tata than 200,000 roles in India for data scientists and AI
Consultancy Services soared to an average of over 22% experts remained unfilled as of August 2022. As global
in financial year 2022, for example. That makes places companies leverage technology to usher in the next wave
like Ahmedabad, Coimbatore, Mysuru and Jaipur more of productivity, they could also find themselves spreading
attractive as emerging hubs. Talent and real estate costs out across the South Asian nation.
for companies can be about 30% and 50% cheaper,
respectively, according to Deloitte.
A man uses JioDive, a smartphone-based virtual reality headset, at the 2023 India Mobile Congress at Pragati Maidan in New Delhi, India, Oct. 27, 2023. REUTERS/Anushree Fadnavis
AUSSIE TYCOON WILL

BLAZE NEW GREEN
ACTIVIST TRAIL
BY ANTONY CURRIE
Atlassian co-CEO Mike Cannon-Brookes

THE 44-YEAR-OLD AUSTRALIAN
has already used some of his billions to
HAS CHANNELLED OR PLEDGED AT
tackle climate change, like battling the LEAST A$2.5 BILLION ($1.7 BILLION)
country’s top carbon emitter. Quitting TO FIGHTING GLOBAL WARMING
the software firm would make him more
effective. Other wealthy moguls may So far the 44-year-old Australian has channelled or
pledged at least A$2.5 billion ($1.7 billion) to fighting
then join him in the activist trenches. global warming, much of it via his personal investment
GREEN FINGERS vehicle, Grok Ventures, run by Jeremy Kwong-Law.
Billionaire Mike Cannon-Brookes may put more of his While that in some respects is akin to what fellow tech
money where his mouth is during 2024. The co-CEO magnates like Bill Gates and Jeff Bezos do, Cannon-
of enterprise software company Atlassian has been no Brookes is more willing to get into the trenches.
slouch at talking up the need to tackle climate change
In 2022 he took the limelight when Grok teamed up
and has already devoted some of his wealth to the cause.
with Brookfield Asset Management in a $4 billion joint
But he would become even more effective by stepping
take-private bid for AGL Energy, Australia’s biggest
down from the role he has held for some two decades.
carbon emitter. When that failed, he bought a roughly
ATLASSIAN RECOVERY IS CANNON-BROOKES’ ACTIVIST FUND
Source: LSEG | A. Currie | Breakingviews | Nov. 29, 2023

10% stake – worth some A$700 million ($460 million) as of Granted, he has said he wants to stay at Atlassian,
November – foiled the company’s plan to separate its power which has its own issues including slowing growth. But
generation and retailing businesses, and helped get four overhauling the top ranks after more than 20 years could
new board members elected. He also played a prominent help, and its stock rose some 60% in the year since its
role as Grok bested Fortescue founder and fellow tycoon November 2022 low. That has pushed up the value of his
Andrew Forrest to win control of Sun Cable, a struggling roughly 20% stake, held almost entirely in supervoting
startup aiming to build 20 gigawatts of solar farms. shares, to some A$10 billion, giving him more firepower
to take on other corporate climate laggards, should he
Such star-power influence can only go so far if the
choose to take up activism full-time. That might convince
activist investor has a day job, though. AGL’s own energy
other billionaire benefactors – like Gates, Bezos, or long-
transition, for example, is proceeding slowly. Cannon-
serving bosses like Salesforce’s Marc Benioff – to spend
Brookes would have more sway being inside on the
more time alongside him in the green activist trenches.
board than being outside calling it one of the “most
toxic companies on the planet”, as he did in August. First published January 2024
Mike Cannon-Brookes, co-founder of software firm Atlassian, gestures during a Reuters interview in central Sydney, Australia, June 5, 2013. REUTERS/Daniel Munoz
GEN ALPHA
WILL TIRE OF
LIVING ONLINE
BY ANITA RAMASWAMY
As kids born in the 2010s age into the In addition to cutting down screen time, the internet’s
next generation will look to get more out of what they
digital world, their fatigue from being put in. Those who have slowly been lulled into increased
forced online will prompt a backlash online usage have been willing to accept the implicit
similar to Gen Z. Both will become agreement that underpinned the rise of social media,
wherein companies offered services like email and
smarter about the implicit agreement
messaging to users at no cost in exchange for the ability
of trading services for data – and make to collect data about them and sell it to advertisers.
life more difficult for companies from Younger generations are going to become more
Alphabet to OpenAI. aggressive about demanding a change.
SCREENED OUT The rise of generative AI tools trained to mimic human

For all the changes that technology has brought about, behavior will only accelerate the backlash. Tech firms such
one thing will stay the same in 2024. Generation Alpha, as Alphabet and OpenAI are facing lawsuits from authors
kids born in the 2010s, are going to want to be “different” and artists who say the companies improperly scraped
from their parents. For them, that means spending less their intellectual property from the web to train AI models.
time online. For companies counting on their data, that Startups like Caden and Datacy claim to help reshape this
means life is about to get harder. relationship by allowing users to peddle their valuable
data directly to firms. Tech giants are on notice. Instagram
parent Meta Platforms and social media site X both rolled
GENERATION ALPHA, KIDS BORN
out new tools in 2023 to facilitate payments to content
IN THE 2010S, ARE GOING TO creators who post on their platforms.
WANT TO BE “DIFFERENT” FROM
THEIR PARENTS If companies don’t pay up, Gen Alpha kids will make use
of tools to withhold their personal information. TikTok
Members of the youngest generation may have a role influencer Coco Mocoe, who herself has over 1 million
model in their slightly older peers when it comes to followers, reckons that virtual avatars will become
pushing back against an all-enveloping digital world. popular among young users seeking to mask their
Globally, the amount of time people spent on social identities on social media sites. Some parents, too, are
media declined year-over-year in 2023 for the first time growing wary. Meta boss Mark Zuckerberg, for example,
since the consumer research firm GWI started tracking hides his kids’ faces when posting photos of them
it in 2012, according to its latest survey of over 950,000 publicly. As their generation grows up, they’re likely
internet users. Gen Zers, born between 1997 and 2007, to do as Zuckerberg does, not as his company hopes.
are at the forefront of the shift. One-third of those First published December 2023
surveyed said they were actively trying to limit their
usage of such platforms, seeking out hobbies and
friendships in the physical world instead.
Children chat to their grandparents via Facebook’s Messenger video chat during the Covid-19 outbreak in El Masnou, north of Barcelona, Spain, April 8, 2020. REUTERS/Albert Gea
CHAPTER 2
COMEBACKS
22 REUTERS BREAKINGVIEWS | Comebacks
MEGA-BANK M&A GOES

FROM IMPOSSIBLE
TO IMAGINABLE
BY LIAM PROUD
After 2008, CEOs saw investment-bank Big bank M&A is tainted by painful memories of hubristic
transactions, culminating in the $100 billion breakup
deals as risky while regulators saw them of Dutch lender ABN Amro in 2007 by Royal Bank of
as dangerous. UBS will prove otherwise Scotland, Banco Santander of Spain, and Belgium’s
if it safely and profitably absorbs Credit Fortis. That deal contributed to the collapse of two
consortium members the following year and taught
Suisse. Imitators will not get the same
a generation of bank CEOs that buying a rival meant
sweet deal, but targets like SocGen treading on financial landmines. Regulators, meanwhile,
and Barclays at least come cheap. introduced rules penalising the largest and most
complicated lenders. For the 30 global systemically
TWINKLE IN THE EYE
important banks, mergers would mean holding even
Big bank mergers are no longer taboo. Ever since
more capital.
the 2008 crisis bosses have considered consolidation
between large lenders unworkable, while regulators
deemed it undesirable. UBS Chief Executive Sergio THE IMPLOSION OF CREDIT SUISSE
Ermotti may change that if he safely and profitably AND ITS SUBSEQUENT STATE-
absorbs local rival Credit Suisse. ORCHESTRATED RESCUE BY UBS
CHALLENGES THE RECEIVED WISDOM
EUROPEAN INVESTMENT BANKS’ LOW PRICE TO BOOK VALUE
Note: Share price divided by analysts’ average forecast for tangible book value per share in 12 months’ time
Source: LSEG Datastream, Breakingviews calculations | L. Proud | Breakingviews | Nov. 17, 2023
The implosion of Credit Suisse and its subsequent state- After deducting tax at 24% and applying a 10% discount
orchestrated rescue by UBS challenges the received rate, the net present value of those savings is $76 billion,
wisdom. Start with regulators. Swiss watchdog FINMA before factoring in one-off costs like severance payments.
for years watched as the Zurich-based lender limped That is close to UBS’s market value as of November.
from one crisis to another, while its shares traded at
Admittedly, an M&A copycat would not get the same
a big discount to book value. Investors and customers
sweet terms. UBS paid just $3.7 billion for its local rival
eventually lost faith. The lesson is that well-capitalised
while regulators also wiped out funky debt securities
but unloved banks can fall out of favour fast. With
worth $17 billion. But SocGen and Barclays are hardly
hindsight, Swiss authorities may have preferred an
expensive. The French bank is valued at one-third
earlier and more orderly merger.
of forecast tangible book value for 2024, potentially
That experience will shape the thinking of supervisors appealing to local rival BNP Paribas or long-term
responsible for lowly valued European lenders like Société suitor UniCredit. Barclays, which trades at two-fifths of
Générale and Barclays. There is no reason to think either expected book value, could be attractive for Santander,
of those institutions will run into trouble soon. Yet investors which could wring out cost savings in Britain while
are sending a pessimistic signal about their long-term boosting its Wall Street presence.
prospects. A takeover by a more profitable rival might
None of those deals are likely. But as memories of 2008
avoid a potential Credit Suisse-style headache.
recede and UBS safely swallows Credit Suisse, they are
UBS’s Ermotti is setting a promising standard for would- more imaginable by the day.
be imitators by planning cuts equivalent to a quarter of
the two banks’ combined adjusted total costs in 2022.
The logos of Swiss banks UBS and Credit Suisse are seen in Zurich, Switzerland, March 20, 2023. REUTERS/Denis Balibouse
BIOFUELS COMEBACK
WILL GIVE WEST A
RARE ENERGY WIN
BY LISA JUCCA
Corn is loaded into a truck to be transported for ethanol production in Kelley, Iowa, U.S., Jan. 21, 2020. REUTERS/Shannon Stapleton
Propellants from plant waste and That said, biofuels took a blow in March 2023 when
European Union states decided not to spare them from
animal fats have lost out amid an a planned 2035 ban on combustion engine cars, amid
e-mobility push. Yet the difficulty of concerns for the global food supply chain. Buses and
using electricity for planes and ships, commercial vehicles are also taking the e-route, particularly
in China, where more than 95% of heavy-duty trucks
and the rise of non-edible crops as
produced in 2021 were equipped with lithium batteries.
feedstock, will offset food supply fears.
Western groups like BP, Total and Eni Yet propelling large ships and airplanes requires so
much power that electric batteries are impractical. That
will benefit. hands biofuels a new life. Using sustainable aviation fuel
BACK WITH A VENGEANCE (SAF) made from waste and able to withstand extreme
A global drive to replace combustion engines with electric low temperatures looks the only clean energy option for
cars has threatened to undermine biofuels. In 2024, aircraft: hydrogen and ammonia are either potentially
planes and ships will open a new avenue for propellants explosive or poisonous. Using non-edible feedstock such
made from food and plant waste. That could offer a as castor beans, rather than maize or sugar cane, should
lifeline to fossil-fuel majors such as BP, TotalEnergies help alleviate food security concerns.
and Eni – and benefit the West.
At about 200 million euros, the market for SAF is currently
almost non-existent. Yet global regulation will force a radical
BIODIESEL CAN REDUCE uptake. The EU’s ReFuelEU Aviation initiative, approved
CARBON DIOXIDE EMISSIONS in October, requires sustainable fuel to constitute 70% of
BY 75% COMPARED TO ITS airline propellant by 2050, while the U.S. envisages 100% by
FOSSIL-FUEL EQUIVALENT then. Hence the global market could hit 50 billion euros by
2030 and 500 billion euros by 2050, SFS Ireland reckons.
Biofuels, derived from plant material or animal waste, This paves the way for an acceleration in biofuel demand
can help fight global warming. Biodiesel can reduce that will benefit players with expertise. India, which chaired
carbon dioxide emissions by 75% compared to its fossil- the G20 in 2023 and aspires to become a sustainable fuel
fuel equivalent, the U.S. Department of Energy says. refining hub, has launched a 19-country-strong Global
Oil players like Finnish pioneer Neste have been focusing Biofuel Alliance to accelerate the use of low-emission fuels.
on biofuels as a way to put their refining skills to a less But Europe looks a more obvious winner: it contributed
polluting use. 60% of global production in 2022. Italy’s Eni, the world’s
No. 3 producer, forecasts global demand to grow to 45
million metric tons per year by 2030, from about 10 million
EUROPEAN PLAYERS WILL BULK UP ON BIOFUELS metric tons at the end of 2022.
Hoarding enough feedstock to keep up with rising

demand, without compromising the food supply
chain, will remain a challenge. Analysts reckon global
production will probably be a third less than Eni assumes.
Still, that could keep margins high and improve the
prospect that biofuel businesses can be spun off and
listed at decent valuations.
One relative laggard, in contrast to its breakneck electric

mobility growth, is China. While Beijing announced some
pilot biofuel projects in November, consumption is relatively
scarce. In 2024 Western groups have a chance to jump at a
green technology the People’s Republic has yet to dominate.
Note: Expected annual production of biofuels measured in capacity (millions of metric tons per annum) First published December 2023
Source: Bernstein | L. Jucca | Breakingviews | Nov. 24, 2023
TOYOTA WILL ENGINEER

A HALF-ELECTRIC
RENAISSANCE
BY KATRINA HAMLIN
The world’s largest carmaker is playing

TOYOTA, WHOSE SALES NEARED
catchup with electric upstarts like Tesla
9 MILLION VEHICLES IN THE YEAR
and China’s BYD, just as global demand ENDING IN MARCH 2023, SOLD
for EVs slows. But boss Koji Sato will ZERO PURE BATTERY-POWERED
capitalise on the Japanese giant’s edge CARS AS RECENTLY AS 2019
in hybrid vehicles as the tech enjoys
Toyota, whose sales neared 9 million vehicles in the
a sudden renaissance.
year ending in March 2023, sold zero pure battery-
U-TURN powered cars as recently as 2019. Competitors seized
The world’s largest automaker will pull back into the the opportunity in electric-friendly markets. Tesla
fast lane. Toyota Motor risked being left behind in an displaced Toyota as California’s bestseller in 2023.
electric-vehicle revolution, and new boss Koji Sato has In China, Toyota’s first mass-produced EV, the bZ4X,
vowed to catch up. But in 2024, his greatest asset will was met with a cool reception as local marques like
be the company’s lead in battery-gas hybrids. BYD gained fans.
TOYOTA’S HYBRID SALES ARE PICKING UP SPEED
Note: 2023 estimate annualises sales (millions of units) for January to October
Chinese Source:
battery Toyota
maker |CATL’s Chief| Breakingviews
K. Hamlin Executive Robin Zeng
| Nov. 29,attends
2023 a news conference in Berlin, Germany, July 9, 2018. REUTERS/Hannibal Hanschke
With Tesla’s once-$1 trillion valuation overshadowing Meanwhile, Toyota has a mature technology it can exploit
Toyota, whose market capitalisation is around a quarter in the form of hybrid vehicles. The company pioneered
of that figure, and seemingly unanimous agreement this combination of battery motor and gas engine with
that the future was all-electric, Sato went to work on the Prius in 1997. The idea is enjoying a renaissance in the
a turnaround. Since taking the wheel in April, he has U.S. and China, and analysts at Nomura reckon higher oil
unveiled an electric roadmap that includes research into prices will accelerate adoption in 2024.
new technologies and revamping Toyota’s manufacturing.
Toyota’s hybrid sales grew by a third to power record
There has been progress. Toyota’s pure-electric sales operating profit in the quarter ended in September.
look set to quadruple in 2023 from 2022, albeit from Those ever-deep pockets are helping to keep Sato’s
a low base. And in October, the company announced electric dreams on track. Days after GM and Ford
a “technological breakthrough” in solid-state batteries, announced cutbacks, Toyota said it would spend an
promising vastly longer range and quicker charging. extra $8 billion on a new factory in North Carolina.
Sato’s masterplan will take time: next-generation models Riding these successes, shares gained more than 40% in
only hit the tarmac in 2026. But rivals’ pace has slowed, Sato’s first six months on the job. Still, Toyota’s valuation
along with demand. Global electric-vehicle sales were multiple of 9 times expected 2024 earnings paled next
just shy of 10 million in the first nine months of 2023, to BYD’s 14 or Tesla’s sky-high 65 times forecast earnings
per Canalys, suggesting a roughly 30% increase for the as of November, per Visible Alpha. Taking the middle lane
full year. That’s down from triple-digit gains in 2021. between gas and electric, it can close the gap.
General Motors and Ford Motor have scaled back or
deferred EV investment plans, while declining prices
and growth have sapped Tesla’s operating profit margin.
Toyota CEO Koji Sato holds a briefing during a press day of the 2023 Japan Mobility Show at Tokyo Big Sight in Tokyo, Japan, Oct. 25, 2023. REUTERS/Issei Kato
CONVERTIBLES WILL
BE 2024’S HOT
FINANCIAL MODEL
BY JEFFREY GOLDFARB
Hybrid bonds, which fueled hedge Convertible notes that provide steady income, but which
can turn into shares at pre-agreed prices, sputtered after
fund billionaire Ken Griffin’s rise,
a $370 billion pandemic-era boom in 2020 and 2021.
sputtered after a $370 billion Covid-era Roaring stocks ultimately made the equity piece more
boom. Refinancing needs are revving alluring, even enabling dozens to be sold bearing zero
them back up as interest-cost savings interest. Emblematic of the crop was a $1 billion issuance
from Covid-hyped fitness company Peloton Interactive
lure new issuers like Duke Energy. that required a 60% rise in its stock price to convert.
New features should tempt investors
The theoretically optimized hybrid of loss-protected
to ride off with them again. debt and equity-like upside crashed into stark reality,
HYBRID POWER however. In 2022, the S&P 500 Index dropped by some
Now is a good time to take a spin in a new convertible. 20%. Now, more than $200 billion of these securities
Refinancing needs and higher interest rates will refuel are set to mature by 2025, reckon BNP Paribas analysts,
the crossbred bonds that once helped springboard with many of the associated stocks well below their
Citadel founder Ken Griffin from Harvard student to conversion prices. Peloton’s has fallen more than 90%
billionaire hedge fund manager. And new features since borrowing the funds.
should tempt investors to ride off with them again.
CONVERTIBLE BOND ISSUANCE COOLED DOWN POST-PANDEMIC
Note: 2023 data is through Nov. 16

Source: LSEG | J. Goldfarb | Breakingviews | Nov. 16, 2023
Stronger issuers than fledgling and unprofitable technology

DESPITE THE MANY LEMONS companies also should help kick things into higher gear.
CLUNKING AROUND THE Duke Energy, which carries an investment-grade rating,
MARKET, FRESH MODELS sold its first convertible bond in 2023, using some of the
ARE BEING ENGINEERED money to pay off short-term funding it typically favors.
The appeal of Griffin’s hallmark trade is also rising for fund

Despite the many lemons clunking around the market, managers. It can be a fairly simple proposition: Buy the
fresh models are being engineered. Benchmark U.S. bonds and sell short the underlying equity. If the stock falls,
interest rates have reached a two-decade high, making the bond’s downside is protected, while the short reaps a
it more expensive to borrow. The lower coupons paid by profit. If the price goes up, the bond’s will too, flipping the
convertible bonds and the delay in any equity dilution result. These swings supply the core of the profit.
should be attractive under the circumstances. By
mid-November 2023, issuance had jumped 34% from Higher rates provide a helpful twist: Invest cash proceeds
the same span a year earlier versus a 65% decline in from the short in safe, higher-yielding Treasury bills and
leveraged loans and a mere 4% bump for investment- add it to the bond income. These benefits also can be
grade debt, according to LSEG. amplified by introducing leverage and other derivatives,
albeit with additional risk. Those extra features will make
convertibles 2024’s hot financial model.
First published January 2024
A man carries an umbrella as he passes the New York Stock Exchange in New York, U.S., Oct. 16, 2014. REUTERS/Brendan McDermid
SWISS PHARMA
MEGA-DEAL
HAS HEALTHY
PROGNOSIS
BY AIMEE DONNELLAN
The Swiss national flag flies in front of a building of drugmaker Novartis in Basel, Switzerland, Jan. 29, 2014. REUTERS/Arnd Wiegmann
In 2001 Novartis took a stake in Roche, of years given failed drug trials including a treatment
for Alzheimer’s. These disappointments, along with a
yet a deal never happened. Over two relatively sparse pipeline, have seen Roche lose over 40%
decades later, the mooted acquirer is of its market capitalisation between its peak in 2022 and
the stronger of the two and could gain late November. Newish CEO Thomas Schinecker is setting
his sights on restoring the group’s pipeline, but that will
from vast synergies and more heft in
be costly and take years.
oncology. Making the $440 billion union
a reality means overcoming family pride, Some Roche shareholders might prefer an exit. Selling
to peer Novartis would allow them to pocket a premium,
and antitrust issues. and a share of synergies from any combination. It would
SWISS ROLL be a big bite for Novartis CEO Vas Narasimhan: a deal
A $440 billion Swiss drug deal may finally have the right with even a 30% premium would value Roche at over
formula. Back in 2001, Novartis took a stake in Roche, $280 billion. But the rewards would be large too. Assume
sparking speculation of a possible merger that never panned synergies equivalent to 10% of sales, and the earnings
out. The companies’ divergent fortunes, however, mean that uplift could total $12.5 billion, worth a whopping $100
the logic of a combination is now more convincing. billion once taxed and capitalised. Moreover, buying
Roche would make Novartis a leader in oncology with
For decades, Switzerland’s largest drugmakers have $22 billion of annual revenues in cancer treatments.
been close rivals and potential partners. Back in 2001,
Swiss activist investor Martin Ebner, who was behind
GETTING SUCH A LARGE DEAL
the merger that created banking giant UBS, offered his
OVER THE LINE WILL FACE TWO
20% voting stake in Roche to its cross-town rival, having
grown frustrated with the group’s management. Roche’s
SIGNIFICANT CHALLENGES
outperformance in subsequent years meant the purchase
worked out very well for $220 billion Novartis, which Getting such a large deal over the line will face two
pocketed a 381% total shareholder return by the time it significant challenges. Antitrust watchdogs may want
sold the stake in 2021, according to LSEG data. some disposals, especially in areas like oncology and
neurology. And the Roche family, which controls 65%
The tables now appear to be turning. Novartis’s share of the voting rights of the company, would need to be
price was up 17% between January and November 2023, willing to loosen its grip. But with the company’s share
thanks to success in its innovative treatments like arthritis price ailing, even radical treatments may start to appeal.
medicine Cosentyx. Meanwhile Roche, worth under
$220 billion in late November, has had a torrid couple First published December 2023
NOVARTIS AND ROCHE’S TOTAL SHAREHOLDER RETURNS SINCE 2001
Source: LSEG | A. Donnellan | Breakingviews | Dec. 1, 2023

DISNEY’S 2024
LIFELINE LEADS
TO TIM COOK
BY JENNIFER SABA
Kansas City Chiefs’ Patrick Mahomes is seen in action with Philadelphia Eagles’ Jordan Davis during Super Bowl LVII at the State Farm Stadium in Glendale, Arizona, U.S., Feb. 12, 2023. REUTERS/Brian Snyder
Boss Bob Iger is seeking a partner for Disney owns 80% of ESPN while Hearst, the publisher
of Elle magazine and the Houston Chronicle newspaper,
sports network ESPN. Tim Cook’s Apple has the other 20%. The network has roughly 71 million
would be a nice co-owner. The brands subscribers through basic cable packages, as of
are aligned, the executives have a history September. But drumming up viewers is getting harder
as eyeballs are fixed on streaming.
with movie studio Pixar, and the iPhone
maker is getting deeper into sports.
DISNEY NEEDS MONEY
MATCH UP AND APPLE NEEDS CONTENT
Walt Disney and Apple have a history together. A future
partnership could be in the cards too. Disney Chief Both Disney and the $3 trillion technology giant
Executive Bob Iger is seeking a team-mate for sports have invested heavily in their respective streaming
network ESPN. Apple head Tim Cook is expanding into businesses, but they are in different stages. Disney
soccer and baseball coverage for its streaming service. needs money and Apple needs content, so a deal could
In 2024, Iger could look to Cook for a deal. work. Cook has bought rights to Major League Soccer
Disney is casting around for a minority partner to invest and Major League Baseball. Having ESPN as its main
in sports cable network ESPN. It’s part of a wider effort outlet would be a punch up. Plus, Apple could seed the
undertaken by Iger, who is under pressure from activists sports network on iPhones and through Apple TV to
including Nelson Peltz, to re-evaluate the $170 billion juice customer acquisitions.
entertainment company’s broadcast portfolio, which Meantime Iger could get a cash infusion. ESPN generated
includes other networks like ABC and FX. approximately $3 billion in EBITDA for the year ending
Apple is a logical place to start. One of Iger’s hallmark September. On a multiple of 10 times, ESPN has an
deals was to buy Apple co-founder Steve Jobs’ animation enterprise value of $30 billion. With $162 billion in cash
studio Pixar for $7.4 billion in 2006. The all-stock on Apple’s balance sheet, Cook could easily swing the
transaction made Jobs the largest shareholder in the investment and provide a lifeline to a familiar friend.
Magic Kingdom, earning him a seat on Disney’s board. First published December 2023
Cook in turn recruited Iger to Apple’s board in 2011,
where he served until 2019.
ESPN HAS BEEN LOSING SUBSCRIBERS FOR A DECADE
Note: Number of subscribers to Disney’s ESPN channel. For the year ended Sept. 30, 2023
Source: Walt Disney | J. Saba | Breakingviews | Dec. 1, 2023
MICROSOFT WILL
FINALLY MAKE ITS
MARK IN MOBILE
BY JENNIFER SABA
The software giant has famously tripped Buying “Call of Duty” maker Activision Blizzard affords
Microsoft as much opportunity in smartphones as it does
itself up in smartphones for years, but to upgrade its Xbox division. One of the company’s most
boss Satya Nadella is primed to play valuable assets, and a big contributor to its $3.5 billion of
catchup. His Activision and OpenAI 2022 mobile revenue, is “Candy Crush Saga”. Released in
2012, the addictive tile-matching video game, which has
deals pave the way with “Candy Crush”,
been downloaded some 5 billion times, keeps topping the
Xbox and ChatGPT. Bruising app wars charts more than a decade later, according to research
at Apple and Google may exact a high outfit Sensor Tower.
price, however. Artificial intelligence gives Microsoft another way to dial in
GAME ON to the market. Its $10 billion capital injection into ChatGPT
Microsoft is finally answering the call on mobile. After owner OpenAI should help Nadella expand further beyond
missing out on much of the boom, the software goliath its primary business customers. The chatbot racked up
is in prime position to make up for lost time. Boss Satya more than 100 million users within two months of its
Nadella’s two latest deals provide a useful boost, but release, making it the fastest rollout UBS analysts had
engaging in app wars also carries great risk. seen in two decades of following the industry.
MICROSOFT’S ACTIVISION DEAL LANDED IT TWO OF THE TOP 10 US MOBILE GAMES
Source: Sensor Tower | J. Saba | Breakingviews | Dec. 1, 2023

Chinese battery maker CATL’s Chief Executive Robin Zeng attends a news conference in Berlin, Germany, July 9, 2018. REUTERS/Hannibal Hanschke
Together, these two investments increase Microsoft’s ability an attractive alternative and threaten the fees Apple and
to gauge consumer behavior, using data collected from Google collect. Gaming accounted for an estimated 20%,
in-app purchases and cloud gaming subscriptions. It also or $17 billion, of Apple’s services revenue for the year
ratchets up the competition with other technology titans ending September 2023, according to Jefferies analysts.
fiercely competing to match or surpass human intelligence.
Nadella’s growing mobile clout already has emboldened NADELLA MAY YET HAVE
him to talk with partners about starting Microsoft’s own THE LAST LAUGH
gaming app store. The company previously staked some
ground by testifying for “Fortnite” parent Epic Games Throwing its weight around in mobile will invite more
in its ongoing lawsuit against Apple and Google, which regulatory scrutiny of Microsoft, after largely avoiding
alleges that monopoly power enables them to force the spotlight in the 25 years since it was a defendant in
developers to use proprietary payment systems that a landmark U.S. antitrust case. Increased market power
take a 30% cut of purchases. should also reverse another piece of history in a more
beneficial way. When asked about the newly released
The European Commission, meanwhile, recently targeted
iPhone a dozen years ago, Microsoft’s then-boss Steve
six tech “gatekeepers”, which could lead to third-party
Ballmer cackled about its prospects. Nadella may yet
workarounds of the two operating-system goliaths. With
have the last laugh.
Microsoft’s branding power, its own Xbox shop would be
Microsoft CEO Satya Nadella speaks during a Reuters Newsmaker event in Manhattan, New York, U.S., Sept. 27, 2017. REUTERS/Shannon Stapleton
STANCHART M&A
THEORY WILL FINALLY
BECOME REALITY
BY ANSHUMAN DAGA
For years, the bank run by Bill Winters The London-listed lender has been the subject of M&A
rumours for decades, with mooted suitors including
was cheap but dysfunctional. Now, it’s Barclays, ANZ, and even the state-owned Chinese banking
producing significantly higher returns behemoths. First Abu Dhabi Bank (FAB) in early 2023 said
on tangible equity but the valuation it had studied a possible offer but was no longer doing so.
remains low. If that persists in 2024,
it will be hard for suitors like First Abu THERE ARE GOOD REASONS WHY
A BID HAS NEVER MATERIALISED
Dhabi Bank to resist launching a bid.
THROUGH THE WINTER There are good reasons why a bid has never materialised.
Things are finally going well for Bill Winters’ Standard Start with StanChart’s global sprawl, which includes
Chartered. After a long period of anaemic performance, wholesale and retail-banking businesses and spans 50
the Asia-focused lender generated a 10.4% underlying countries in Asia, Africa, the Middle East and elsewhere.
return on tangible equity in the first nine months of 2023, Very few possible acquirers would have an interest in
excluding a one-off impairment charge. But you wouldn’t bulking up in all those markets at the same time. The
know it from the share price. If that disconnect persists in vast global footprint also means there are dozens of
2024, long-running takeover theory may get real. regulators and governments who could potentially
make a takeover tricky.
STANDARD CHARTERED’S RISING RETURN ON TANGIBLE EQUITY
Note: 2023 figure is for the first nine months of the year. Chart uses most recent restated figures where available
Source: Company reports | A. Daga | Breakingviews | Nov. 24, 2023
What’s changed, however, is that StanChart’s long- A combination of the United Arab Emirates’ biggest bank
standing discount now jars with the performance that and StanChart could form the financial backbone of these
Winters is churning out. Throughout much of 2023, flows. Offering to divest businesses could ease regulators’
the bank’s share price bounced around between 0.5 fears. It also helps that the 18% of StanChart owned
times and 0.6 times analysts’ average forecast for its by Temasek for more than a decade looks increasingly
tangible book value in 12 months’ time, LSEG data like a non-core holding. In theory, a would-be acquirer
show. Historically, a low multiple was justified by low could sew up roughly one-fifth of the shares in one go by
returns. But if the London-headquartered lender’s getting the Singapore state investor to tender.
recent performance is sustainable, there shouldn’t really
Any bidder would have to be confident that U.S.
be a discount to book value at all. The upshot is that
authorities would allow the enlarged entity to keep
StanChart now looks attractively cheap, rather than
StanChart’s dollar-clearing licence, which would be a
deservedly so.
bigger gamble for FAB than for Western lenders. Still,
That could tempt FAB to take another look in 2024. the gap between the bank’s valuation and its recent
A takeover would fit nicely with Gulf states’ ever more performance makes for an alluring financial combination,
expansive corporate ambitions. Trade corridors are and boosts the chance that someone will finally pounce.
growing between the Middle East and Asia.
Standard Chartered CEO Bill Winters speaks during the Global Financial Leaders’ Investment Summit in Hong Kong, China, Nov. 2, 2022. REUTERS/Tyrone Siu
CHAPTER 3
FALLING
FLAT
39 REUTERS BREAKINGVIEWS | Falling flat
POLLS MAY IMPERIL EMERGING

ASIA’S POLICY STABILITY
BY UNA GALANI AND ANSHUMAN DAGA
India and Indonesia have had a

VOTERS AMONG THE 1.7 BILLION
decade of relative predictability under
PEOPLE IN THE TWO ASIAN
leaders Narendra Modi and Joko BEHEMOTHS WILL GO TO THE
Widodo. Elections in 2024 could POLLS IN 2024
upend that and undermine the lofty
valuations of local stock markets. Voters among the 1.7 billion people in the two Asian
behemoths will go to the polls in 2024. The results will
Global investors, and 1.7 billion people, be watched closely by foreign executives and investors
should temper expectations. who are trying to reduce their dependence on China
and cut risks in their supply chains. Together India and
ALL CHANGE
Indonesia account for almost 18% of the MSCI Emerging
A predictable, business-friendly environment is a rare
Markets Index, more than double the level 10 years ago.
find in emerging markets. India and Indonesia have
Chinese CEOs are also looking hard at these countries as
enjoyed this elusive commodity, more or less, for roughly
domestic growth slows and labour costs rise.
a decade under leaders Narendra Modi and Joko Widodo,
respectively. With elections coming up, the political A change of president is guaranteed in Jakarta. Jokowi,
stability governing some $4.7 trillion worth of GDP will as he is popularly known, has reached his term limit and
come under question. cannot stand for re-election. But his son is the running
mate of Defence Minister Prabowo Subianto, a two-time
presidential loser who is chasing the top job again.
INDIA AND INDONESIA ARE EXPENSIVE MARKETS
Note: Forward price-to-earnings ratios

Source: LSEG | U. Galani | Breakingviews | Nov. 30, 2023
That joint ticket is both favourite and controversial: third consecutive term. Policymaking could get bogged
Jakarta suffered some of the worst civil unrest in years down in petty squabbles in this scenario, as it was before
in 2019 after Prabowo initially refused to concede defeat he came to power in 2014, even though politicians
following elections that handed Jokowi a second term. across the divide broadly agree on the economic path
forward. Corruption could soar too. Annual foreign direct
Jokowi’s successor will have big shoes to fill. Foreign
investment into India has already fallen back down to
direct investment into Indonesia, at $45 billion, is at a
2018 levels and any sign of political upheaval could scare
20-year high and the government’s industrial policy is
off companies waiting on the sidelines to invest.
embedding nickel-rich Indonesia into the global supply
chain for electric vehicles. Chinese companies now The world has obsessed about geopolitics for some time.
dominate the country’s smelting capacity, however. As the focus also zeroes in on domestic politics, both
At least one presidential candidate, Jakarta Governor countries’ markets are priced to perfection and assume
Anies Baswedan, might be inclined to pivot Southeast some continuation of the status quo. The MSCI India
Asia’s largest economy towards the United States, Index was near a record high as of Dec. 3, trading at 20
though he is not a frontrunner in the race. times earnings, while the MSCI Indonesia Index was at
13 times, above the wider emerging market benchmark’s
Modi remains firm favourite to win in India and results
12 times forward valuation. That leaves plenty of room
released in December from state polls suggest robust
for disappointment.
support for his ruling party. Yet the country could see the
return of a messy coalition government if his Bharatiya First published December 2023
Janata Party is unable to win an outright majority for a
India’s Prime Minister Narendra Modi (L) talks to Indonesia’s President Joko Widodo (R) prior to a photo session during the 20th ASEAN-India Summit as part of the 43rd ASEAN summit in Jakarta
on Sept. 7, 2023. Adek Berry/Pool via REUTERS
ARTIFICIAL INTELLIGENCE
WILL EMBARK ON A DATA DASH
BY KAREN KWOK
Text and photos produced by The sophistication of AI software depends in large part
on the quality of the datasets on which it trains. Social
professionals are key to training and media posts are easy to find on the internet but can
improving AI models. But accessing reflect bias or prejudice, while pictures tend to be blurry.
this information is getting harder and Using such data may lead to racist and misogynistic
output, as Microsoft experienced when it trained an
more expensive. AI firms will have little
AI model using Twitter posts.
choice but to pay for data, pushing up
already-high costs – and delivering This is why AI companies are looking for more reliable
sources, such as scientific papers and books written
a windfall to publishers. by professional authors. These are harder to find.
THE IMITATION GAME Researchers from Epoch, who sort data into high and low
The artificial intelligence race is turning into a dash for quality, estimate there are as many as 17 trillion high-
data. The most cutting-edge AI models can already quality words freely available on the internet, compared
achieve high scores in the U.S. bar exam and write with up to 71 quadrillion low-quality ones. If AI models
human-like text. To keep improving their abilities, keep swallowing information at the current rate, they
software needs to train itself on more sophisticated types could run out of superior data before 2026.
of information, such as pictures and scientific papers.
But these data are less available and more expensive.
AL MODELS ARE SUCKING UP EVER MORE DATA
Source: BofA Global Research, Our World in Data, Epoch, Parameter, Compute and Data Trends in Machine Learning, DeepMind: Training
Compute-Optimal Large Language Models | K. Kwok | Breakingviews | Dec. 5, 2023
RELX, owner of The Lancet and the LexisNexis legal

THERE ARE AS MANY AS database. Shares in the company, which builds AI
17 TRILLION HIGH-QUALITY software in-house and sells it to customers and was
WORDS FREELY AVAILABLE ON worth over $70 billion in early December, are up more
THE INTERNET, COMPARED than 30% in the past year. News Corp, which publishes
WITH UP TO 71 QUADRILLION the Wall Street Journal and the Times, is negotiating
LOW-QUALITY ONES content deals with AI developers which it says will bring
in “significant revenue”.
One option is for developers to use AI to generate fresh Such deals will be an additional cost for AI companies,
data for specific models. Several projects are already which already spend the equivalent of 15% of their
using so-called synthetic content, often sourced from revenue sorting and cleaning data, venture capital firm
data-generating services such as Mostly AI. American Andreessen Horowitz estimates. Royalty payments will
Express creates such data to help it detect uncommon eat into profit margins thinned by expensive computing
fraud patterns, while Alphabet’s Waymo uses made- power and rising cloud storage costs. But companies
up scenarios to help train its self-driving software. such as OpenAI, creator of the ChatGPT chatbot, don’t
Research group Gartner expects 60% of AI data will have much choice. Warner Music Group, Getty Images
be synthetic in 2024, up from just 1% in 2021. and many other creators are suing AI companies for
unauthorised use of their content. One way or another,
However, AI models are still hungry for real-world
AI companies will have to pay up for their data dash.
information held by large publishers and offline
repositories. This could be a windfall for groups like First published December 2023
“Desdemona”, an AI-powered robot, stands on stage and answers questions from visitors during the IFA international consumer technology fair in Berlin, Germany, Sept. 1, 2023. REUTERS/Lisi Niesner
CHINA’S AUTOMAKERS
WILL DEFY THE GREAT
UNCOUPLING
BY JONATHAN GUILFORD
There are industries, like microchips, Detroit-based automakers General Motors and Ford
Motor still agree, despite their production difficulties,
where American trade warriors can that electric cars are the future. They’re racing to catch
cleave friendly supply chains from Elon Musk’s Tesla, the U.S. company that proved battery-
China. Cars aren’t one of them. Despite powered rides can catch on. The Inflation Reduction
Act, passed in 2022, promises billions of dollars in
$80 billion of announced investments,
subsidies, and companies have announced $80 billion
lagging tech holds U.S. champions of electrification investments since its passage.
back. In 2024, that will prove the limits
Protecting all-American marques is part of the plan.
of protectionism. The IRA focuses too, though, on supporting domestic
MY WAY OR THE HIGHWAY manufacturing of batteries, electric cars’ most crucial
It has become a truism that China and the United States component. The cost of letting China dominate the market
are engaged in a great uncoupling. In strategically is high. Batteries won’t just power cars, but will also be
sensitive areas, from microchips to telecoms equipment, key in propping up the electric grid, since energy from
a wedge has already been driven between the two renewable sources must be stored somehow until needed.
superpowers. But car companies – and specifically
electric vehicles – could sketch out the limits of CHINA HAS A FORMIDABLE LEAD
American protectionism.
CHINA’S TOWERING MARKET SHARE IN BATTERY PRODUCTION
Note: China’s global share of production in each category

Source: Goldman Sachs | J. Guilford | Breakingviews | Dec. 1, 2023
The trouble is that China has a formidable lead, which China. Ford had to license the technology from Chinese
stretches from refining raw materials through to final firm CATL, raising the possibility that U.S. subsidies
production. The country accounts for roughly three- will flow to its partner. Chinese suppliers are already
quarters of global battery cell supply, according to developing sodium-ion batteries, another upcoming
Benchmark Mineral Intelligence, and has a cost advantage technology, too.
to boot. Chinese nickel-manganese-cobalt cells, the most
Even for finished cars, there may be routes into the
popular for cars, were 15%, or $18.30 per kilowatt-hour
United States: Members of Congress have raised
of energy capacity, cheaper than Uncle Sam’s home-made
concerns about Chinese automakers establishing
equivalents in August, Benchmark reckons.
operations in Mexico, where fewer import barriers exist.
Biden’s $35 per kilowatt-hour subsidy for U.S.-made When it comes to chips or cell towers, Washington has
battery cells closes the gap. But Chinese costs are falling an advantage to press. On the road, though, it risks
rapidly – and, more importantly, the People’s Republic being left behind. That makes the pursuit of decoupling
leads in the next wave of battery tech. Tesla, GM and Ford seem a little less logical.
are adopting lower-cost lithium-phosphate batteries
for their cheaper models, over 90% of which come from
A Li L7 electric SUV by Li Auto is displayed at the Auto Shanghai show, in Shanghai, China, April 18, 2023. REUTERS/Aly Song
DEFLATION WILL
HELP BIG GROCERS
GOBBLE UP MINNOWS
BY AIMEE DONNELLAN
A shopper walks next to a photographic depiction of tomatoes on a Tesco supermarket in London, Britain, Feb. 26, 2023. REUTERS/Toby Melville
Supermarkets like Walmart and Tesco are This will put the biggest grocers in a more powerful
position. As wholesale prices ease, the likes of Tesco,
expecting goods prices to finally fall. That which has over 27% of the UK market, French giant
will help larger chains to cut shoppers’ Carrefour and the United States’ largest retailer
bills by putting pressure on suppliers Walmart will be able to pass on savings more quickly
to customers. Ahold Delhaize CEO Frans Muller told
such as Unilever. Smaller rivals may find
a Breakingviews podcast in September that this was
it harder and end up losing customers, already happening. He noted that negotiations with
making them ripe for takeovers. suppliers were becoming easier because grocers
produce a lot of private label items, so they have
PRICING POWER
a more accurate reading on what goods cost.
Big supermarket chains may be unlikely winners from
deflation. Walmart and Tesco are expecting prices to If the giants bring their pricing power to bear, they
fall in 2024 as they pile pressure on suppliers like might crush, or gobble up, smaller players. In Britain,
Unilever. Even more competition will make it harder Waitrose, which generates around 6 billion pounds of
for minnows to retain market share. That could set up revenue, is a prime example of a chain that could be
a new wave of consolidation. sold to a larger rival, not least because its troubled
parent company John Lewis is looking for 2 billion
FOR GROCERS, RISING PRICES pounds from an investor to help fund its turnaround.
CAUSED TWO PROBLEMS Even larger supermarkets like Sainsbury’s, which
generates around 30 billion pounds of sales, could
be a target if Tesco starts passing on wholesale price
Walmart is bracing for falling prices. In November, CEO
falls to consumers and it struggles to compete.
Doug McMillon said key grocery items like fish, eggs and
chicken, as well as pantry items, could start to get cheaper. Since May, valuations of supermarket chains, small
Deflation would represent an about-turn for a sector that and large, are coming down as investors worry about
has faced soaring inflation across Europe and the United deflation’s impact on revenues and margins. But the
States over the past couple of years. For grocers, rising larger grocers will be better equipped to respond by
prices caused two problems. It prompted customers to cutting prices and taking a bigger share of the market.
rein in spending, and it also left supermarkets vulnerable If smaller rivals’ valuations keep coming down, they will
to accusations of “greedflation” – taking advantage of soon find themselves in the bargain basement.
inflation to boost profit margins. Conversely, falling prices
ought to encourage consumers to fill up their trolleys and
more customers to come to the stores.
SMALLER GROCERS HAVE ALREADY BEEN SHRINKING POST-PANDEMIC,

WHILE LARGER RIVALS HAVE HELD STEADY OR GROWN
Note: Grocers’ market share in home market

Source: Kantar Worldpanel | A. Donnellan | Breakingviews | Nov. 30, 2023
EU TECH RULES WILL CREATE

CLICKS, NOT COMPETITION
BY REBECCA CHRISTIE
Brussels wants to force Google, Meta and Alphabet, Meta Platforms, Apple, Amazon.com, ByteDance
and Microsoft are the first targets of the Digital Markets
Apple to open up app stores, messaging Act, a 2022 law that requires so-called gatekeeper services
networks and search engines. The U.S. to open up their “walled gardens”. The EU in September
giants will have to let startups compete identified 22 products at the six companies, including
Google Search, social networks like Facebook and TikTok,
and offer consumers more opt-outs. It’s
and browsers like Chrome and Safari.
likely to result in lawsuits and hassle for
users rather than rivals for Big Tech. The designations also include the Google Android,
Windows PC and Apple iOS operating systems, and
TACKLING TECH intermediaries like Amazon Marketplace. Designated
European Union watchdogs are so frustrated with Big firms have until March to show that they are doing the
Tech dominance they have turned their traditional necessary work so that third-party developers have
approach to regulation on its head. Rather than trying access to their platforms and so that consumers aren’t
to prove that existing practices shortchange users, new shoehorned into too many defaults. ByteDance, Meta
digital rules require market-leading companies to simply and Apple already have filed appeals.
open up their systems. But by focusing on competition
among providers instead of whether consumers benefit, But opening the door doesn’t guarantee anyone will walk
the EU’s main result may just be more frustrating clicks. through it. If startups don’t materialise, or if consumers
are reluctant to switch away from familiar brands or
pay new subscription fees, the EU will end up adding
paperwork and annoying layers of “choice screens”
rather than creating more competition.
BRUSSELS’ APPROACH REGULATES

ACCESS, NOT OUTCOMES
Brussels’ approach regulates access, not outcomes.

In designing the new rules, the EU has fallen back on a
definition of competition that focuses on the number of
businesses rather than what might be best for customers.
This framework would consider it a win if previously free
services like Facebook and Instagram start charging fees,
because then companies would no longer have free rein
to scoop up and monopolise customer data.
But consumers may not place the same importance as

regulators on breaking up the market, especially if it
carries extra costs. Instead, they may resent creeping
subscription charges that start out as optional but
eventually become unavoidable for day-to-day use.
European Internal Market Commissioner Thierry Breton delivers a speech during a debate on the Digital Markets Act (DMA) at the European Parliament in Strasbourg,
France, Dec. 14, 2021. Jean-Francois Badias/Pool via REUTERS
And they may rue the time it takes to click through however, it’s mostly known for the endless “cookie”
“choose your default” boxes rather than enjoying benefits consent screens that require consumers to accept, reject
of switching search engines or app stores. or customise data tracking code for websites they visit.
It’s certainly possible that more competition will drive Users in Europe have largely accepted this as the price
costs down in certain areas. If, for example, search of privacy, but there has not been worldwide buy-in.
engines were to keep a smaller portion of advertising- Some non-EU websites have just made their pages
driven online purchase revenues, retailers might lower inaccessible within the 27-country single market, while
their prices. Antitrust litigation in the U.S. has shown that most others have added those click boxes for all their
in 2021 Google paid $26 billion to Apple, Samsung and users worldwide. Very few consumers have the capacity,
others to keep its search engine dominant on phones or time, to make meaningful decisions.
and web browsers – money that could change hands if
In any case, legal fees may eclipse marketplace changes
customers were better able to pick their own defaults.
in 2024, as the big companies roll out challenges to
But a risk is that the EU ends up ignoring the lessons new rules and requirements. This means the European
of its most popular regulations, like one that lowered Commission will either have to collaborate with the
the cost of cross-border cellphone roaming, and firms in enforcing its new rules, potentially watering
doubles down on rules that emphasise policy outcomes down their impact, or brace itself for a decade of
over citizen experiences. The General Data Protection litigation against companies with some of the deepest
Regulation is a cautionary tale. pockets on the planet.
GDPR is generally supported in Europe for its voter- The stakes may make the whole exercise worthwhile.
friendly commitment to the “right to be forgotten”, But to gain public trust, the Commission will have
which gives consumers the power to scrub their data to start paying attention to public prices.
from certain search engines. In the rest of the world,
SEARCH ENGINE MARKET SHARE IN EUROPE
Note: Data as of October 2023

Source: Statcounter Global Stats | R. Christie | Breakingviews | Nov. 21, 2023
AMAZON’S SPACE
DREAMS DESERVE
TO BE GROUNDED
BY ROBERT CYRAN
The tech giant’s $10 billion internet- Such first-mover advantages are why building a
communications network to compete with one already in
in-the-sky venture is years late and place is a recipe for incinerating cash. During the dot-com
thousands of satellites short in rivaling era telecoms boom, entrepreneurs borrowed heavily to
SpaceX. It may appeal to founder Jeff build millions of miles of fiber-optic cables and overlapping
local systems. Poor returns drove a wave of bankruptcies,
Bezos and his rocket-maker Blue Origin.
including the once-$47 billion Global Crossing.
But Amazon risks a costly re-run of prior
telecoms booms that led to painful busts. Of course, Kuiper isn’t an existential bet for Amazon,
which is worth well over $1 trillion. But $10 billion-plus in
FAILURE TO LAUNCH earmarked spending jars with Jassy’s cost-cutting drive.
Amazon.com’s Project Kuiper is a misguided Bezos-founded rocket-maker Blue Origin is in line for
technological marvel. The plan to build a sky-spanning $2.7 billion of that sum, which drew a shareholder lawsuit
network beaming down internet service from space, accusing Amazon of a conflict of interest.
dreamed up when founder Jeff Bezos still ran the
company, took a step forward with the launch of two Since low-orbit satellites need replacing every five years
prototype satellites, which are operating as expected. or so, the spending won’t stop there. Worse, competition
But with costs set to top $10 billion and rival SpaceX’s will be fierce: Eutelsat Communications’ OneWeb has
Starlink well ahead, current chief Andy Jassy would be already begun putting its network into orbit; China alone
best served by grounding the venture. plans networks comprising 25,000 satellites.
The promise of global satellite broadband has drawn A FLOATING GRAVEYARD OF

tech billionaires from Bezos to Microsoft’s Bill Gates, who
UNUSED SATELLITES POSES
backed Teledesic before it went belly-up in the 2000s,
A POTENTIAL HAZARD
to SpaceX honcho Elon Musk. It’s a huge endeavor. To
offer sufficiently speedy connections, satellites must be
close to Earth. That necessitates thousands to ensure That could lead to massive overcapacity, as the fiber
one is always overhead, hence the recent explosion in the boom did. While those cables enabled a flourishing
number being shot into orbit. Starlink has over 5,000. online economy years later, though, a floating graveyard
of unused satellites poses a potential hazard. A recent
Kuiper aims for 3,200, even as Musk plans further U.S. government report warned that space junk from
expansion. Each new satellite increases coverage, making currently planned networks could start regularly falling
it easier to find a connection. That allows for simpler and back to Earth by 2035. Facing an uncertain payoff and
cheaper terminals – the devices customers use to log the possibility that its efforts will burn up on re-entry,
on – even as service improves. SpaceX says its terminals’ Amazon’s best move is bowing out of a futile space race.
cost fell from $1,300 each to under $599 since 2021.
First published October 2023
A rocket lifts off carrying Amazon’s two prototype relay stations for a space-based internet service it calls Project Kuiper, from the Cape Canaveral Space Force Station in Cape Canaveral,
Florida, U.S., Oct. 6, 2023. REUTERS/Joe Skipper
DEAR CHANCELLOR:
INFLATION WILL FALL…
WHEN IT FALLS
BY FRANCESCO GUERRERA
Bank of England Governor Andrew This is the 10th letter I have had to write to a UK finance
minister explaining why consumer price increases are
Bailey has to write to the UK finance
running much faster than we would like. Clearly that’s
minister when consumer price growth not great, since as BoE boss I basically have one job:
is above or below 2%. Yet it’s clear to not let inflation run wild. On the other hand, you are
mere central bankers can’t influence the third Chancellor of the Exchequer I am corresponding
with in just over two years, so things aren’t exactly stable
the behaviour of people or firms. at Number 11 Downing Street either.
Breakingviews imagines a letter in
The fact is that inflation has consistently been well
2024 which says as much. above our 2% target. Oops.
BAILEY’S DREAM
WHY HAS INFLATION MOVED AWAY FROM
Dear Jeremy,
THE 2% TARGET?
Here we go again. As required by the Bank of England’s
Monetary Policy Committee rules, I have to write to you on Here, I could waffle on a bit about “external cost
BoE-noteheaded paper to explain why inflation is so much pressures” – the inflationary effects of the pandemic
higher than our 2% target. And what we, at the central and Russia’s invasion of Ukraine. Then I could bore you
bank, are doing about it. I’m afraid it’s not good news. about “internal cost pressures”, rising wages, and the
price of services like hotels and airfares.
What I wouldn’t say is exactly why inflation remains so

high. Nor when it will fall back to 2%. That’s because,
in a very real sense, we don’t have a clue.
Don’t get me wrong: our PhD-laden staff produce lots

of forecasts. We now say that inflation will fall to 1.9%
in late 2025. But our track record is less than stellar.
You might remember that in September 2021, I wrote
to Rishi Sunak, your pre-predecessor, confidently stating
that “current elevated global cost pressures will prove
transitory”. The CPI index was 3.2% then. It peaked at
11.1% in October 2022. Oops again.
Predicting is of course very difficult, especially if it’s about

the future. (H/T Danish physicist Niels Bohr – I did say I
would bore you.) Even so, we at the BoE are self-evidently
useless at it. Our projections missed the actual inflation
Bank of England Governor Andrew Bailey attends the International Monetary Finance Committee Plenary in Marrakech, Morocco, Oct. 14, 2023. REUTERS/Susana Vera
numbers by an average of 6 percentage points between Better or worse still, depending on how dark your sense
December 2021 and March 2023, according to those of humour is, these draconian measures may not be
know-it-alls at Breakingviews. enough to quell price growth. Sure, inflation has more
than halved since its peak and we do publicly claim
There’s some good news. I have asked Ben Bernanke
we will not rest until it is back to 2% again – because,
to review our forecasting models. He knows a thing or
well, we need to project authority and we can’t really do
two about predictions. He used to run the U.S. Federal
anything else. But the reality is that we don’t have the
Reserve and has won a Nobel Prize. On the other hand,
right tools to fight this kind of price pressure. Our only
in May 2007 he said the subprime crisis “will be limited”.
weapon, short-term rates, is fairly good at dampening
Oops yet again.
demand by making money more expensive. But even that
THE POLICY ACTION THE COMMITTEE IS TAKING is achieved after what Milton Friedman called “long and
IN RESPONSE variable lags”. No, me neither...
Well Jeremy, we are both doing too much and not The problem, Jeremy, is that the bulk of the inflationary
enough. My fancy-dan predecessor Mark Carney may spiral was caused by supply-chain shocks – spikes in
have called me a “big sexy turtle” in honour of my the prices of raw materials, energy and food due to the
excessively “considered” decision-making. He can talk: pandemic and the war. Thankfully, those pressures are
he hardly raised rates at all during his seven-year tenure. now abating, but other inflation drivers are still elevated
I’ve hiked them 14 times to a 15-year high of 5.25%. – “core” inflation excluding energy, food, alcohol and
tobacco was 5.7% in October 2023. That, in turn, is
Trouble is, that might end up crashing an already fragile fuelling workers’ demands for higher wages – up by an
economy. We expect growth of just 0.5% in 2023 and a big annual 7.7% in the three months to September 2023 –
fat zero in 2024. That may not be what you want to hear to pay for the higher cost of being alive.
given how badly the Conservative Party is faring in the polls
ahead of an election expected by the end of 2024. Soz. In conclusion, Chancellor, inflation looks likely to fall
further from here. I just don’t know how fast and when.
What I can tell you, though, is that there is not too much
THESE DRACONIAN MEASURES
we can do about any of the current supply-chain shocks
MAY NOT BE ENOUGH TO QUELL using our only meaningful tool: good old interest rates.
PRICE GROWTH Unfortunately.
Yours sincerely,
Andrew Bailey, AKA Notorious B.S.T.
THE BANK OF ENGLAND REPEATEDLY MISSED ITS 2% INFLATION TARGET

Numbers of letters by the BoE to the UK Treasury to explain inflation misses
Source: Bank of England | F. Guerrera | Breakingviews | Nov. 24, 2023

CHAPTER 4
BACKLASH
53 REUTERS BREAKINGVIEWS | Backlash
THE UNITED
STATES WILL GO
FROM MAGA
TO MAWA
BY LAUREN SILVA LAUGHLIN
Former U.S. President Donald Trump delivers remarks at his “Make America Great Again” rally in Pickens, South Carolina, U.S., July 1, 2023. REUTERS/Evelyn Hockstein
“Make America Worse Again” won’t lows. People are still spending pandemic handouts
enacted under former President Donald Trump. The
be a campaign slogan, but it’s a vibe. number of travelers going through checkpoints at U.S.
Joe Biden’s policies brought jobs airports is hitting records, according to the Transportation
onshore, helped the energy transition, Security Administration. With greenhouse gas emissions
falling, Americans are, by some measures, better off than
and delayed a downturn. But 2024
they were four years ago.
will bring infighting that worsens the
nation’s financial standing and an But generous spending has so far failed to reverse some
long-standing trends. Despite a post-Covid recovery,
electoral test of democracy. the average American’s life expectancy at birth was
DIVIDED IT FALLS 77.5 years in 2022, lower than in 2017, when Trump took
The United States is in for a rocky year that could end office, according to data from the National Center for
with a political rupture. While record numbers of people Health Statistics.
are working and traveling and the air is getting cleaner,
Meantime, rich Americans have continued to get richer
President Joe Biden has failed to change the trajectory
during Biden’s administration. The top 0.1% of the
of the country’s middle class. The coming year will bring
population held $18.6 trillion at the end of the second
Republican Party infighting that worsens the nation’s
quarter of 2023, up almost 20% from the fourth quarter
financial standing and an election that will test its
of 2020 according to Federal Reserve data. The wealth
democracy. “Make America Worse Again” will not be
held by the bottom 50% also grew, perhaps reflecting
a campaign slogan, but in 2024, it will be a vibe.
rising wages. The trouble is that inflation also hurts
The United States is reaching the end of a second those on lower incomes more, according to the Dallas
consecutive presidential term that sacrificed the Federal Reserve.
government’s balance sheet in an attempt to make
citizens’ lives easier. Biden’s sweeping bills to boost RICH AMERICANS HAVE
chipmaking and renewable power will create thousands CONTINUED TO GET RICHER
of new jobs even as unemployment hovers around record
AS THE UNITED STATES GROWS, EMISSIONS DECLINE
Note: Six common pollutants refer to PM2.5 and PM10, S02, NOx, VOCs, CO and Pb
Source: Environmental Protection Agency | L. Silva Laughlin | Breakingviews | Dec. 1, 2023
The country’s shorter-term trajectory suggests little The November budget agreement shows Republicans
improvement. While the pace of inflation, a consequence in the House of Representatives are willing to join
of big spending started by Trump and further enacted forces with their political adversaries to fight the more
by Biden, has slowed, other consequences linger. Soon, extreme wing of their own party. But the unpredictable
servicing the U.S. national debt will cost more per year American public will choose the president. If Trump is on
than funding the country’s military. As the election a ticket, he will win, according to recent predictions by
season approaches, political bickering will make it even FiveThirtyEight, which showed Biden’s favorability rating
more difficult for U.S. legislators to pass a permanent is lower than his predecessor’s. It’s impossible to predict
budget. It’s not a stretch to think that the country will the outcome of an election a year in advance. What seems
default on its debt in 2024. more certain, however, is that the process will Make
America Worse Again.
If current polls prove accurate, the 81-year-old Biden
will face Trump in a replay of 2020’s close contest First published December 2023
that culminated in the former real estate developer’s
supporters storming the nation’s Capitol. Criminal
charges against Trump have made no visible dent in
his popularity with supporters, though Republican
heavyweights including members of the influential Koch
empire have endorsed one of his rivals. Peter Thiel, the
tech billionaire who backed Trump in 2016, has declined
the opportunity to support him again. Yet Trump has
shown before he can defy the grip that party leaders
typically maintain over election candidates.
NET INTEREST PAYMENTS EXCEEDED MANY OTHER PROGRAMS IN 2023
Note: *This includes spending on parts of the Child Tax Credit, K-12 education, school lunches, and other programs for children as well as parts of spending on Medicaid, SNAP, and other programs
Source: US Committee for a Responsible Budget | A. F. Alias | Breakingviews | Dec. 8, 2023
KIM KARDASHIAN WILL BE

KICKED OFF INSTAGRAM
BY LAUREN SILVA LAUGHLIN
The influencer is worth $1.7 billion,

THE PHOTO-SHARING NETWORK
which could climb with her shapewear
HAS MORE THAN 10 MILLION
brand’s IPO. That’s value that doesn’t INFLUENCERS
flow to the owners of platforms
sustaining content creators’ fame, like Kardashian, who clocks more than 360 million followers
Elon Musk or Mark Zuckerberg. The on Instagram, capitalized on her fame to co-launch
private equity firm SKKY Partners in 2023. It’s not her first
best way for them to pull some back: investing foray, having launched Skims, worth $4 billion,
suspend her privileges. in 2019. Other influencers are also generating value that
Instagram parent Meta Platforms and its peers don’t get
WINNING FRIENDS, INFLUENCING PEOPLE
to touch. Though starting from a low base, payments
Kim Kardashian knows how to milk free publicity. The
made directly to individual online stars have grown more
reality-star-cum-influencer has used the likes of Instagram
quickly than advertising revenue at Instagram, Facebook,
to help flog shapewear from her company Skims, among
Alphabet-owned YouTube and Snap, according to market
other things, and she isn’t alone. The photo-sharing
research outfit Insider Intelligence.
network has more than 10 million influencers tapping into
a $21 billion marketing economy, according to McKinsey. The platforms have reason to want a piece. Though it’s
In 2024, social media firms grappling with slowing growth recovered from 2022’s complete stall, Meta’s ad revenue
will want a cut of these side hustles. They’ll negotiate by is projected to grow at half the rate it was in the years
revoking stars’ privileges. prior, analysts polled by LSEG reckon. Snap is going
through its own slowdown.
META PLATFORMS’ ADVERTISING GROWTH HAS SLOWED
Note: Year-over-year growth in advertising revenue

ChineseSource:
batteryLSEG
maker| L.
CATL’s
Silva Chief Executive
Laughlin Robin Zeng
| Breakingviews attends
| Dec. a news conference in Berlin, Germany, July 9, 2018. REUTERS/Hannibal Hanschke
3, 2023
They have one point of leverage to pry back the lucre Instagram to backpedal on app changes in 2022.
slipping through their grasp: the reach they offer to Still, there’s a symbiosis between created content and
influencers. They’re already making some moves. At distribution mechanisms. Both need to get paid.
X, formerly known as Twitter, owner Elon Musk has
Instagram is best placed to force the issue, being by
pushed changes that reward paying to boost a profile,
far the most popular platform for influencer marketers,
showing various metrics illuminating the effects. In 2023,
Insider Intelligence’s data show. What’s on offer is
Instagram tweaked its app to make certain posts less
potentially bigger than McKinsey suggests, as Skims’
visible. Though neither has been particularly successful,
upcoming public offering might prove. Influencers won’t
these companies can try to flex their star-making power,
want to share the wealth. But Meta boss Mark Zuckerberg
potentially enabling them to extract rents from off-
can remind them how much they have to lose with the
platform activities like Kardashian’s.
biggest power play of all: kicking them off the platforms
Influencers might argue that their content creates the that sustain their fame.
community on these platforms. Indeed, Kardashian’s
pull is so powerful that her complaints helped force
Kim Kardashian poses on the red carpet as she arrives for the Time Magazine 100 gala celebrating their list of the 100 Most Influential People in the world in New York City, New York, U.S., April 26, 2023.
REUTERS/Andrew Kelly
GOLDMAN’S PARTNERSHIP IS
TOO MUCH OF A GOOD THING
BY JOHN FOLEY
The arcane and elite 420-member group Goldman partners stopped being partners in the strictest,
firm-owning sense when the U.S. investment bank went
bolsters the bank’s cachet, but sometimes public in 1999. Their collective shareholding has fallen
exerts power that’s out of sync with from about 60% to roughly 5%. Instead, the designation
other shareholders. Boss David Solomon now describes about 420 senior employees who benefit
from higher pay, exclusive investment opportunities and
already answers to his board, clients and
the expectation of being heard by top executives.
45,000 other employees. He would do
well to cut the inner circle down to size. Partners answer to David Solomon, Goldman’s CEO. But
he answers to them, too, because they’re on the front lines
SPARRING PARTNERS carrying out his plans. The friction became real in 2023 as
The hallowed Goldman Sachs partnership is an Goldman’s consumer banking project produced growing
undeniable part of the Wall Street firm’s cachet. For losses. High-status insiders griped that the division was a
more than 150 years, the elite club has helped attract drain, and that savings accounts and credit cards were too
top-notch financiers. It is also too much of a good thing. déclassé for the platinum-plated institution.
Outsiders had little obvious reason to complain. The

PARTNERS ANSWER TO DAVID
bank’s shareholder returns have, over five years, matched
SOLOMON, GOLDMAN’S CEO. those of chief rival Morgan Stanley. Goldman tops the
BUT HE ANSWERS TO THEM, TOO rankings of M&A and equities trading.
GOLDMAN’S PARTNERSHIP HAS BECOME INCREASINGLY ELITE
Note: New partners and managing directors are named in alternating years
Source: Company filings | J. Foley | Breakingviews | Dec. 5, 2023
Its earnings are volatile, but mostly because of global The Goldman partnership faces existential questions
markets and investment banking, in which more than half either way. Its numbers have barely changed over the past
the current partners work. Their concerns ultimately won decade even as the bank’s overall headcount increased
out, however: Solomon has, piece by piece, dismantled 40%. Promotions to the sub-partner managing director
his once-prized retail business. level, meanwhile, have soared. If the partnership’s biennial
intake doesn’t expand, it risks appearing unattainable.
It’s a good example of how partners sometimes
Make it bigger, and the balance of power skews further
clash with other constituencies. At worst, a cadre of
the wrong way.
long-tenured employees – plus the 750 or so retired
partners Goldman carefully cultivates – could create an One way to square the inner circle would be to slowly
unhelpful brake on new ideas or organisational change. phase out the partnership, while keeping its perks: that
If Morgan Stanley housed a similar star chamber, Chief is, appoint ever-fewer new partners, but extend the first-
Executive James Gorman might have struggled to pivot class benefits to high-performing managing directors.
so decisively into wealth management, the division Doing so would be in the interest of other shareholders,
responsible for his bank’s premium valuation multiple. too. For them, the sense of privilege and loyalty the
partnership engenders is an asset; its clout is a liability.
Goldman Sachs CEO David Solomon speaks at the company’s headquarters in New York City, U.S., Nov. 14, 2023. REUTERS/Brendan McDermid
BLOCKCHAIN’S
REBIRTH WILL PASS
UNITED STATES BY
BY ANITA RAMASWAMY
Regulators are cracking down on digital True, crypto and blockchain aren’t the same, and most
cryptocurrencies might prove largely worthless. But
asset firms while Congress dithers over digital tokens and the technology underpinning them are
passing rules to govern them. Financial inextricably linked, in part because there is big overlap
hubs like London, faster to set guidelines, between developers of both. The United States’ sluggish
approach to crypto rule-making is starting to drive
will capture the value created not just
innovators away.
by crypto, but by potentially powerful
distributed ledger technology. A big reason for that is that lawmakers elsewhere are
feathering the digital economy’s nest. A new European
CRYPTO SPRING Union law setting guidelines for digital asset firms is due
After a brutal cryptocurrency downturn wiped out over to take effect in 2024, and the UK plans to bolster its own
$1 trillion of investors’ wealth since 2021, new hope is legislation soon. Decision makers in Washington, though,
starting to emerge. But if the United States continues are merely muddling along, and as a result the United
to promote a crypto exodus, the recovery of digital assets States is losing ground: Data compiled by Electric Capital
and their underlying blockchain technology might pass show that the share of blockchain developers based in
the world’s biggest economy by. the country has fallen each year since 2018.
BLOCKCHAIN DEVELOPERS LOOK TO BE ABANDONING THE US
Note: Data represents the % share in each region of the total number of individual blockchain developers based on their self-reported location
Source: Electric Capital | A. Ramaswamy | Breakingviews | Dec. 4, 2023
Despite recent high-profile blowups, U.S. companies The big risk is that if Uncle Sam loses the loyalty of
are still investing in blockchain. Financial services firm bitcoin and blockchain developers, the U.S. economy may
Franklin Templeton in April put a money-market fund miss out on even bigger, yet-to-be-imagined advances.
on a digital ledger to speed up the settlement process History shows other examples of new technologies
and lower costs, while Walt Disney in November unveiled turbocharging older ones. Take graphics processing
plans for a blockchain-powered collectibles marketplace. units. The recent explosion of super-powerful artificial
Hopes that U.S. authorities might approve the first intelligence models that run on those units, which
bitcoin exchange-traded fund have helped rekindle themselves aren’t new, has helped chipmaker Nvidia’s
enthusiasm, too. In the last week of November, digital stock price more than double in the past year.
asset investment products saw their largest inflows
Worryingly for the U.S., crypto firms are already beginning
since 2021, according to investment firm CoinShares.
to spread their bets. Venture capital firm Andreessen
Horowitz itself opened its first non-U.S. office in London
THE U.S. ECONOMY MAY MISS in 2023 to focus on digital assets. If innovators keep
OUT ON EVEN BIGGER, YET-TO-BE- rushing for the exits, American influence over potentially
IMAGINED ADVANCES valuable emerging technologies could sneak away too.
A worker checks fans on miners at a cryptocurrency farming operation in Farnham, Quebec, Canada, Feb. 2, 2018. REUTERS/Christinne Muschi
GREEN BACKLASH
WILL SPREAD TO
EUROPEAN PARLIAMENT
BY LISA JUCCA
Pro-environment parties risk losing European Commission President Ursula von der Leyen
has kicked off a raft of initiatives designed to ensure the
clout in June’s pan-EU vote. That will 27-nation bloc achieves net zero carbon emissions by
reinforce a strengthening bond between 2050 by heavily reducing or offsetting all greenhouse
conservatives and far-right forces wary gases. The policies support renewable energy, reduce
waste, promote efficient buildings, boost organic farming,
of the industrial and social cost of the
and foster clean mobility. The European Parliament,
clean transition. The EU’s ambitious which co-adopts EU laws together with the bloc’s
Green Deal will get a paler hue. member states, has traditionally been an enthusiastic
proponent of green policies.
GREEN CROSSROADS
The European Union’s green backlash will spread to its Yet the recent electoral success of far-right parties in
parliament in 2024. The growing electoral success of Italy, the Netherlands and elsewhere suggests priorities
nationalist parties across the continent risks undermining are shifting. If traditionally pro-environment socialist and
pro-environment forces in the next European Parliament green lawmakers lose ground in the vote, the European
vote in June. That will reinforce a strengthening bond Parliament’s environmental focus may blur.
between conservatives and far-right politicians wary of
the industrial and social cost of the clean transition,
and may water down the EU’s ambitious Green Deal.
WHAT THE NEXT EU PARLIAMENT MAY LOOK LIKE
Note: European Parliament seat projections following 2024 vote

Source: Politico’s polls of polls | L. Jucca | Breakingviews | Dec. 4, 2023
Cracks are already appearing. In November EU Meloni’s Brothers of Italy. Throw in Hungarian Prime
lawmakers torpedoed a bill to curb the use of pesticides Minister Viktor Orbán’s Fidesz and a few others and the
in farming, a pillar of the Commission’s green strategy, anti-environmental parliamentarians may at best win
as conservative and right-wing lawmakers responded to 190 seats, or 26% of the total, up from around 22% now.
lobbying from the agricultural industry. On the same day, Besides, nationalist parties tend to struggle to present
the chamber also watered down targets for reducing and a united front in Europe as their domestic interests often
reusing packaging to cut waste. clash. Witness the disagreement between Italy and
Hungary on a failed EU immigration deal.
OPINION POLLS SUGGEST Still, concerns that the EU’s plan for a fast climate
RADICAL LAWMAKERS WILL transition may leave behind many low-income workers
INCREASE IN NUMBERS and impose heavy costs on citizens may resonate more
widely. The conservative European People’s Party,
Opinion polls suggest radical lawmakers will increase in projected to be the largest force in the EU Parliament,
numbers but probably remain a minority in the European is concerned about the additional burden that new
Parliament. The Identity and Democracy group, which green legislation will impose on traditionally important
includes Marine Le Pen’s National Rally in France and European industries such as car-making, fossil fuel
the Dutch Freedom Party led by Geert Wilders, is on track energy and chemicals.
to capture 12% of the seats, according to Breakingviews
After the next European Parliament election, the
calculations based on opinion polls available on Dec. 4,
continent’s green policies may get a paler hue.
2023, closely followed by the European Conservatives
and Reformists, including Italian Prime Minister Giorgia First published January 2024
European Commission President Ursula von der Leyen delivers the State of the European Union address to the European Parliament, in Strasbourg, France, Sept. 13, 2023. REUTERS/Yves Herman
SOCCER WILL INCH

TOWARDS FINANCIAL
RATIONALITY
BY STREISAND NETO
Manchester City’s Julian Alvarez celebrates with Erling Haaland during Manchester City vs. RB Leipzig at the Etihad Stadium, Manchester, Britain, Nov. 28, 2023. REUTERS/Molly Darlington
TV income is stagnating or shrinking Leaner times may be ahead. The growth in broadcast-
deal income has slowed in Europe. Telecoms and pay-TV
in the big European leagues, and groups, who used to fight tooth and nail for the rights to
regulatory limits on clubs’ spending screen games, have put a stop to ever-spiralling auction
will soon bite. Chelsea, Man United and prices, and streaming giants like Amazon.com haven’t
fully picked up the slack. The Premier League’s latest TV-
others must either do a much better job
rights package, announced in early December and worth
at monetising their vast global fanbases, 6.7 billion pounds over four years, saw live rights value
or finally clamp down on player salaries. grow just 4% compared to the previous process, far below
the rate of inflation.
PARKING THE BUS
Soccer’s financial free-for-all may be ending. After years Globally, TV money is still rising. But big clubs’ top lines
of lavish spending, European giants like Erling Haaland’s have nonetheless slowed in recent years, partly because
Manchester City and Jude Bellingham’s Real Madrid now of the pandemic. The aggregate revenues of Manchester
face the prospect of stagnant TV-rights income and closer City, Manchester United, Germany’s Bayern Munich and
regulatory scrutiny. The clubs must either do a much Spain’s Real Madrid rose at a 10% compound annual rate
better job at wringing cash from their far-flung fanbases, between 2010 and 2019. Since 2019, annual growth has
or finally clamp down on player transfers and salaries. dipped to 4%.
And football authorities are finally getting serious in

CLUBS IN ENGLAND’S PREMIER their attempts to enforce financial discipline. The Union
LEAGUE, FOR EXAMPLE, SPENT of European Football Associations, which runs the sport
2.4 BILLION POUNDS ($3 BILLION) in Europe, is for the first time imposing a cost cap in the
BUYING PLAYERS IN THE SUMMER current sporting season. Its new rules roughly state that
OF 2023 clubs’ spending on player transfers, wages and fees for
intermediaries like agents cannot exceed 90% of the sum
The past decade or so in European soccer was of total revenue and player-trading profits. That maximum
characterised by ever-spiralling costs. Clubs in England’s ratio will fall to 80% next season and 70% the year after
Premier League, for example, spent 2.4 billion pounds that. Consultancy Football Benchmark calculated that
($3 billion) buying players in the summer of 2023. That’s the average percentage for 20 of Europe’s biggest clubs
almost quadruple the equivalent figure from 2013, was 86% in 2021, suggesting that many teams were miles
according to Deloitte’s numbers. Salaries soared too. away from complying with the future harsher rules.
The wage bill at Saudi Arabia-owned Newcastle United,
To get sporting costs below the 70% threshold by 2025,
whose stars include Bruno Guimarães, was equivalent
big-spending clubs will have to change their ways now.
to 95% of revenue in the financial year to June 2022.
That’s because major player contracts typically span
several years, as do amortisation charges for transfer
SOCCER CLUBS’ SLOWING REVENUE GROWTH RATES fees. One option is to keep costs the same but boost the
top line. European soccer executives often bemoan the
fact that they have millions of fans in Asia, North America
and elsewhere but no obvious way to get money out
of them. Fixing that would help, but may take a while.
That means many clubs will have to turn to cuts instead.

Letting more expensive older players leave, potentially
to the big-spending Saudi league, could help. So would
using more local talent, rather than signing pricey foreign
stars. However they do it, the end result will have to be
the same: a more defensive financial performance from
Europe’s top soccer teams.
Note: Financial year to June. Real Madrid excludes player transfers. UK clubs converted to euros
at average financial-year exchange rates
Source: Company reports, Breakingviews calculations | L. Proud | Breakingviews | Nov. 23, 2023 First published December 2023
“POLLUTER PAYS”
DOCTRINE WILL TAKE ON NEW MEANING
BY LISA JUCCA
Carbon-intensive throwaway fashion and

MORE THAN 350 MILLION METRIC
ubiquitous plastic waste are dirtying the
TONS OF COCA-COLA BOTTLES,
globe. That may change as governments MARS WRAPPERS AND OTHER
start to crack down on discarded textiles PLASTIC ITEMS ARE DISCARDED
and polymer-based items. Companies EACH YEAR
and their investors face a costlier journey
Plastic, a range of wonderfully versatile and resistant
to a more sustainable world.
materials derived from petroleum, has become
WASTE NO MORE ubiquitous in sectors ranging from food products to
Companies will learn the hard way that polluting the fashion. Its success is linked to the fact that it’s seemingly
world has a cost. Ten years after the deadly Rana Plaza cheaper than more sustainable alternatives. For example,
factory-building collapse that killed more than 1,000 containers in biodegradable plastics, like those produced
underpaid textile workers in Bangladesh, cheap polyester by CJ Biomaterials, owned by Korean food and biotech
clothes from Shein, Boohoo or Primark continue to fill our company CJ CheilJedang, can be three to five times more
wardrobes before hitting the landfill. Meanwhile, more expensive than those made of fossil fuel-based virgin
than 350 million metric tons of Coca-Cola bottles, Mars plastics. Polyester yarn tends to cost less, and last longer,
wrappers and other plastic items are discarded each year. than natural fabric.
This may change as a crackdown on fossil fuel-based
Yet the environmental cost of regular plastic is 10 times
waste takes shape in 2024.
higher once waste management, greenhouse gas emissions
and the damage to the ecosystem are factored in.
GLOBAL PLASTIC CONSUMPTION IS EXPLODING
Source: OECD | L. Jucca | Breakingviews | Nov. 24, 2023

The additional economic burden, which the World contributions to deter overproduction. In France, where
Wildlife Fund calculated at over $3 trillion per year in a scheme of this kind has been in place since 2007,
2019 against a market cost of $370 billion for all plastics the fee has averaged just 0.16 euros per garment, says
produced that year, is currently borne by governments Bloomberg. Targets to reduce the use of virgin plastic,
and consumers rather than companies. which has increased by 11% globally since 2018, are also
sorely needed, although oil-producing countries including
Plastic polluters will soon have to start to pay their fair
Saudi Arabia and Russia are against legally binding caps.
share. California is currently discussing a bill that would
require textile companies to design, fund and implement Investors have yet to grasp the potential negative impact
the collecting, sorting and recycling of the garments they of a rise in waste management costs for companies.
produce. The European Union proposed in July that fashion Shares in Zara owner Inditex and H&M rallied around
companies either collect a gradually increasing percentage 50% from the start of January to Dec. 1, 2023, while
of clothes, linen or shoes or pay a fee towards the cost of those in bottler Coca-Cola HBC were up 8%. Meanwhile,
managing waste. That seems sensible given that 85% of deals in the packaging segment, which accounts for 40%
discarded shirts and dresses end up in landfills. of global plastic waste, have been booming.
The approach, known as extended producer Yet the financial challenge of addressing climate change
responsibility, is also at the centre of discussions around while also cleaning up the planet is so huge that many
a United Nations treaty to end plastic pollution, to be governments around the world are starting to act. Global
finalised in 2024. To be effective, however, the “polluter corporate titans had better get ready to pay up.
pays” doctrine has to impose sufficiently high financial
First published January 2024
Clothes with discount labels are displayed at a department store in Paris, France, Jan. 12, 2022. REUTERS/Sarah Meyssonnier
U.S. DEFENSE MINNOWS

WILL STORM THE BARRICADES
BY JONATHAN GUILFORD
Even as conflict in Ukraine leads

AMERICAN MILITARY SPENDING
American arms makers to boost REACHED $877 BILLION IN 2022
production, the political mood is turning
against giants like Lockheed Martin. Rising global conflict and global rearmament are
With half the $415 billion handed to swelling defense budgets. Total American military
spending reached $877 billion in 2022, up 40% from
American defense contractors not
the prior decade’s lows. Defense agencies obligated
receiving a competitive bid, newcomers some $415 billion to contractors that year. Since Russian
will make battlefield gains. President Vladimir Putin invaded in early 2022, the U.S.
has provided millions of artillery rounds and thousands of
STRATEGIC SHIFT
missiles to Ukraine, according to the State Department.
U.S. defense giants are due to cede territory on the
battleground. After decades of Pentagon-backed This might seem an opportunity for the biggest
consolidation, political pressure and the challenge U.S. defense contractors to cash in. Instead, current
of arming Ukraine are forcing a hard look at reduced and former government officials have criticized a
competition. That means less latitude for big firms to consolidated, margin-conscious industry for making
gobble up rivals, and more government money directed supply chains more fragile and being slow to boost
to newcomers. production to replenish stockpiles.
US DEFENSE CONTRACTS ARE LESS COMPETITIVE
Note: Fiscal year 2022 figures

Source: Government Accountability Office | J. Guilford | Breakingviews | Dec. 6, 2023
It’s a change of strategy from the U.S. government’s This official onslaught seems to have made the industry’s
post-Cold War stance. In a 1993 meeting – since dubbed prime contractors more cautious. The five companies
the “last supper” – Pentagon officials warned defense – Lockheed Martin, RTX, General Dynamics, Boeing
industry leaders that, after the Soviet Union’s collapse, and Northrop Grumman – spent only $89 million on
they could only support a dwindling number of suppliers. acquisitions in 2023, according to Dealogic, the lowest
The message: consolidate. outlay in a decade aside from pandemic-scarred 2020.
Since then a wave of mergers, from the 1994 tie-up of More importantly, there are tentative signs the
Lockheed and Martin Marietta to 2019’s combination government is willing to shift money to upstarts like
of Raytheon and United Technologies, has reduced autonomous weapon-maker Anduril or 3D-printed
competition. The number of prime defense contractors rocket developer Ursa Major Technologies. The largest
capable of handling the most complicated projects has defense companies’ share of awards edged down in 2022,
fallen from 51 to five. Data from the Baroni Center for according to the Center for Strategic and International
Government Contracting show that the share of dollars Studies, while small contractors won over $80 billion.
awarded through a competitive process has been on the Spending buckets that largely pay out to non-traditional
decline. According to the Government Accountability Office, vendors have grown. And after tech firm Palantir
the competition rate for defense contracts in 2022 was 58%, Technologies and Elon Musk’s SpaceX sued over the
versus 84% for work awarded by civilian agencies. government’s contracting practices, the field seems
to be opening to upstarts.
That complaisance won’t last. Politicians like Senator
Elizabeth Warren are pressuring defense agencies. The Investor money is flowing accordingly, with venture
GAO in October issued recommendations for overhauling capital firms sinking roughly $27 billion into the defense
defense deal oversight by identifying which acquirers should industry in the year to November 2023, up from $1.9
come in for scrutiny and monitoring the effects of concluded billion a decade ago, according to PitchBook. Despite a
tie-ups. And the DOD, spurred by an executive order from defense spending boom, the industry’s giants will remain
President Joe Biden, in 2022 penned a report warning pinned down.
that consolidation and decreased competition in areas like
rockets can drive up costs and hamper procurement.
A U.S. navy crew member works on an F-35B fighter jet on the deck of U.S. Amphibious Assault Ship USS Makin Island, anchored at a naval base in Busan, South Korea, March 23, 2023.
REUTERS/Kim Hong-Ji
CHAPTER 5
PICKING UP
THE PIECES
71 REUTERS BREAKINGVIEWS | Picking up the pieces
FIXING INTEL
ENDS WITH
TAKING IT
APART
BY ROBERT CYRAN
The chip giant faces the existential Intel’s fix is straightforward and difficult: regain its
technological crown, which Gelsinger plans to do by 2025,
challenge of regaining its lost lead in by introducing multiple generations of chips in rapid fire.
manufacturing. Doing so could double
The gains would be substantial. Analysts put Intel’s
its market value to $300 billion, but
2024 revenue at $59 billion. If it grew 10% annually from
maintaining an edge requires ever there, roughly how fast the top end of the market grows,
more spending, fed by serving outside sales would top $70 billion in 2026. If a technological
customers. The best way to do that: comeback propels Intel to an earnings margin and
valuation multiple of 14 times earnings typical of its
split Intel in two. heyday, its valuation would double to $300 billion.
FIX AND SPLIT
Intel will have to get out of its own way. The U.S. INTEL NO LONGER HAS NECESSARY
semiconductor giant is unusual in both designing and PRODUCTION VOLUME ITSELF TO
building its own chips under one roof. But now that MAKE FACTORIES ECONOMICAL
its manufacturing technology has fallen behind, it’s
dragging down both sides of the business. Boss Pat
Success isn’t a given. TSMC’s lead may compound as
Gelsinger has vowed to regain Intel’s edge. The best way
the spending required to catch up increases further and
to do so for the long term is to split the company in two.
further. Intel no longer has necessary production volume
Chipmaking requires putting ever more capital and itself to make factories economical. So Gelsinger wants
technological expertise to work. Intel’s next-generation to mimic his rival, offering to manufacture chips for others
manufacturing facility in Arizona will cost $30 billion, to defray the cost of new plants.
about eight times more than new sites cost two decades
Snag is, Intel’s manufacturing arm will always have
ago after adjusting for inflation.
a reason to prioritize its own chips to support its
Back when the company’s manufacturing led the world, design business. That conflict of interest means other
this spending paid off handsomely, giving its chips an semiconductor firms may be wary of signing up at
insurmountable edge. In recent years, though, Intel sufficient scale.
has been overtaken technologically by stand-alone
Beginning in 2024, Intel will report manufacturing
manufacturer TSMC. Rival chip designers, now able
results separately. An eventual full split would generate
to access cutting-edge facilities, have taken share. With
more value if it brings more customers to Intel’s plants.
demand falling, Intel’s factories are running below full
After all, TSMC only manufactures chips, and its market
capacity. Its expected 2023 operating margin of only
capitalization is three times as large as Intel’s. Gelsinger’s
8%, according to LSEG data, is down from over 30%
plan to fix Intel should end with breaking it up.
in the company’s heyday. TSMC’s margin is expected
to be over 40%. First published September 2023
An Intel logo is seen on a sticker on a laptop in Queens, New York, U.S., Nov. 16, 2021. REUTERS/Andrew Kelly
BEIJING WILL BUILD

SAFETY NET AROUND
HOUSING HOLE
BY CHAN KA SING
Zhao Youming, 60, looks at an unfinished residential building where he bought an apartment, at the Gaotie Wellness City complex in Tongchuan, Shaanxi province, China, Sept. 12, 2023.
REUTERS/Tingshu Wang
China’s debt-stricken developers have

OFFICIAL DATA SUGGEST THERE
left 20 million homes unfinished. Local
WERE NEARLY 300 MILLION
governments can turn the crisis into an “MIGRANT WORKERS”
opportunity by taking on stalled projects
and converting them into public housing. Nonetheless the Chinese population is extremely mobile.
State firms will increase their presence in Official data suggest there were nearly 300 million
“migrant workers”, those who work and live far from their
the property market in the process. home towns, and more than 60% of them live in rental
UNFINISHED REVOLUTION housing on an average monthly income of 4,615 yuan
Everyone knows China has a big problem: major ($650), 40% below the nationwide average.
developers are crippled by debts and have left millions
Runaway home prices in recent years have also made
of residential units unfinished. Few remember that the
it difficult for people with “hukou” in large cities to
People’s Republic has long strived for the socialist ideal
purchase their own properties. This has instilled a
of providing homes for all. In 2024, Beijing is likely to
sense of insecurity, especially among younger people,
usher in more drastic policies to use the property market
contributing to broader problems such as a dwindling
crisis to achieve its ultimate housing policy.
birth rate and high youth unemployment. More and more
China has one of the world’s highest home ownership young adults are becoming “full-time children” who live
rates. More than 90% of urban households, defined with, and off, their parents.
as those with residence permits, or “hukou”, own their
In August, the State Council published an all-
homes. The ratio is even higher in rural regions, where
encompassing directive calling for nationwide efforts for
villagers typically build their houses on collectively
a “new development model” of the real estate market,
owned land.
with the provision of cheaper, subsidised homes being
one of the key policy drives.
CHINA’S POPULATION IS INCREASINGLY MOBILE
Note: Percentage of people living away from their home towns

Source: National Bureau of Statistics | Chan K. S. | Breakingviews | Nov. 23, 2023
The opportunity, so to speak, is the current property crisis. There are signs that Beijing is already steering state
Nearly all major private builders, including giant ones such banks to stump up more liquidity to support the new
as Evergrande and Country Garden, have defaulted on their drive, with talks that the central government is planning
massive debts, leaving the construction of a large number to inject 1 trillion yuan in phases into urban renewal
of residential projects delayed or stalled. There isn’t an projects and public housing programmes. This may still
official tally of unfinished homes. In October, Nomura not be enough, although state-owned property firms,
analysts put the figure at about 20 million units nationwide, especially those with a regional focus, could also weigh in.
saying it would cost $440 billion to complete them all.
Beijing will have to be comfortable with more property
Most local governments rely heavily on land sale income, exposure for state banks, as well as the rising presence
so in the past they had little incentive to build an of the state in the real estate market. But the risks
extensive housing safety net. The glut of uncompleted associated with the moves may be acceptable as long
homes, however, offers them a much cheaper option as they move China closer to the ideal society that
to take on an important political duty. They could President Xi Jinping envisions.
acquire stalled projects, especially those in more remote
locations, below the price at which they sold the land.
The injection of government funds could relieve some
of the financial pressures faced by distressed builders.
CHINA’S UNSOLD RESIDENTIAL PROPERTIES ARE ON THE RISE
Note: 2023 figures are from January to October

Source: National Bureau of Statistics | Chan K. S. | Breakingviews | Nov. 23, 2023
SONY ACTIVISION RIPOSTE

WILL INVOLVE MOBILE GAMING
BY OLIVER TASLIC
Microsoft’s $69 billion Activision deal Analysis. Its mobile operations are more modest: the
Japanese group announced a PlayStation Studios Mobile
threatens its Japanese rival’s console Division as recently as 2022. Compare that to Microsoft.
dominance. But it also establishes a The software giant has shot from mobile obscurity to
bridgehead for the U.S. firm in the $90 superstardom with its $69 billion deal for Activision
Blizzard, owner of “Candy Crush”, which recently passed
billion mobile gaming space. Recent
$20 billion in lifetime revenue.
mobile weakness and an expected
return to growth mean 2024 is a good It’s a huge market to aim for. Overall, the mobile segment
of gaming, which includes the likes of “Subway Surfers”,
time for Sony to plug in too. raked in about $90 billion in 2023, Newzoo reckons. That’s
RULES OF THUMB almost as much as console and PC games combined.
The object of Nintendo’s 1980s video game “Duck Hunt” But the last two years have been tough. Privacy changes
is to pick off targets just as they rise above the horizon. on Apple’s iPhone have made it harder for game makers
The bird-blasting title could offer a template for a Sony to target new players with ads, while the casual nature
mobile gaming acquisition in 2024. of mobile gamers has made them more likely to switch
off amid a cost-of-living crisis. Shares in a basket of
Sony is well known as the maker of the PlayStation, mobile gaming companies fell 38%, on average, between
which commands almost half the near-$60 billion the beginning of 2022 and late November 2023. That
market for console gaming, according to Ampere compares to a 9% fall for the Nasdaq Composite Index.
MOBILE GROUPS HAVE UNDERPERFORMED MORE DIVERSIFIED PEERS
Rebased share price performance. Dec. 31, 2021 = 0. Mobile gaming firms comprise Roblox, Playtika, Huuuge, PlayStudios, Stillfront and GungHo
Source: LSEG Datastream, Breakingviews calculations | O. Taslic | Breakingviews | Dec. 1, 2023
That could make for some enticing targets as the industry

bounces back. TD Cowen analysts said in November MOBILE GAMING ALSO HAS
that they expected U.S. mobile game in-app purchases LOWER BARRIERS TO ENTRY
to jump 5.8% in 2024 and 6.7% in 2025. Sweden’s THAN CONSOLES
Stillfront, which was worth around $600 million in early
December and owns over a dozen mobile studios, could Mobile gaming’s future looks relatively bright. Ongoing
be one target. Tokyo-listed GungHo, the $1 billion-plus lawsuits and EU legislation are attempting to chip away
maker of “Puzzles and Dragons”, is another option. at the 30% cut that Apple and Google take of in-game
A truly mammoth play would be for Roblox, whose purchases, potentially boosting the future profitability
eponymous game had 56 million daily active users in of those that make the actual games. Mobile gaming
2022, three-quarters of whom were on mobile. Placing also has lower barriers to entry than consoles, meaning
a premium on Roblox’s $20 billion-plus enterprise value it tends to grow faster, especially in the developing world.
puts it well beyond Sony’s $11 billion of cash. But it could The sector’s valuation dip in 2022 and 2023 could offer
also pay in shares, and the Japanese group’s low leverage Sony an opportunity to plug in.
ratio could give it the option of raising debt as part of a
deal – Morningstar analysts predict that net debt will only First published December 2023
be half of EBITDA in 2024.
A worker uses his phone in the shade in New York City, U.S., July 5, 2023. REUTERS/Brendan McDermid
BP AND EQUINOR WILL

FIND COMMON GROUND
BY YAWEN CHEN
The British oil major is undervalued

BP’S PARTICULARLY CHEAP
against peers and is in a leadership
VALUATION AND FRAGMENTED
vacuum. That makes it vulnerable OWNERSHIP COULD TURN IT INTO
to a takeover as U.S. mega-mergers A HOSTILE TAKEOVER TARGET
shake up the sector. Daring to tie up
with Norwegian ally Equinor offers a European energy companies were trading at a nearly
50% discount to U.S. rivals on a price to cash flow basis
powerful hedge and a springboard. in November. But BP’s particularly cheap valuation and
BETTER TOGETHER fragmented ownership could turn it into a hostile takeover
Mega-mergers have strengthened U.S. oil majors Exxon target. Its market valuation slipped to just 3 times its cash
Mobil and Chevron and revived talks of more cross- flow for the next 12 months, well below the 4 times fetched
border M&A. One player looks potentially vulnerable: by Equinor, larger British rival Shell and French competitor
Britain’s BP, worth around $100 billion at the end of TotalEnergies, LSEG data show. Also, Equinor had over $10
November. Its valuation is depressed and the abrupt billion in net cash at the end of September, while these
departure of former CEO Bernard Looney has created two rivals held more debt than cash.
a leadership void. Daring to merge with similarly sized
Norwegian ally Equinor may allow BP’s next boss to both
protect and strengthen the UK group.
BP’S LOW VALUATION LEAVES IT EXPOSED
Note: Price to next 12 months’ cash flow

Source: LSEG | Y. Chen | Breakingviews | Nov. 27, 2023
Working on a defence strategy by capitalising on existing Norwegian major to diversify away from gas pipeline
business ties would make sense. In 2020 BP became exports to Europe, which are set to shrink. Equinor would
a green partner to Equinor through the $1.1 billion also take on BP’s much larger oil trading arm.
acquisition of a 50% stake in its U.S. offshore wind
BP, meanwhile, would be in a stronger position to keep
projects. The duo has also stood out as planning to spend
investors happy. The UK company has pledged to return
more than rivals on low-carbon assets: BP has pledged
60% of its surplus cash flow to shareholders. Equinor’s
to invest between $7 billion and $9 billion a year by 2030
high-margin Norwegian oil and gas operations could
in businesses including electric-vehicle charging, biofuels
boost payouts and provide capital for green investments.
and hydrogen. That would be equivalent to half of its
projected annual capital expenditure, up from 30% in There’s one major hurdle. The Norwegian state, which
2022. At over 50%, Equinor’s non-oil spending target is owns 70% of Equinor, may be reluctant to lose majority
similar. TotalEnergies, in comparison, expects to devote control. Yet a transaction in which the Scandinavian
only about a third of its capital to low-carbon ventures. group offered a 30% premium through shares and
Finally, BP Chairman Helge Lund, who led Statoil – before some $10 billion in cash would see Oslo remain the
it was renamed Equinor – for a decade until 2014, provides top shareholder with around a third of the enlarged
the UK group with a strong Norwegian connection. company, Breakingviews calculates. That would give
Norway enough heft to control the board and block
A merger would bring financial benefits. Shell’s purchase
unwanted strategic moves. Elsewhere in Europe, the
of BG Group led to annual pre-tax savings of $4.5 billion,
Italian and Finnish states hold 32% and 36% respectively
or 1.5% of their 2015 revenue. On that basis, a tie-up of
in national champions Eni and Neste. Paris cut its stake
BP and Equinor could generate synergies worth $4.8
in TotalEnergies to less than 1% in the 1990s.
billion a year on combined 2024 revenue of $317 billion,
per LSEG forecasts. Through BP, Equinor would gain a If Lund can make a strong case at home, a $200 billion-
bigger international footprint and greater exposure to plus European energy major with a shared climate vision
the lucrative liquefied natural gas segment and green could become a reality.
industries in the U.S. and Asia. This would help the
A BP gas station is seen in Zurich, Switzerland, March 11, 2022. REUTERS/Arnd Wiegmann
OZEMPIC OVERSHOOT WILL

PLUMP UP BARGAIN-HUNTERS
BY ROBERT CYRAN
New weight-loss drugs are So-called GLP-1 drugs, originally developed to treat
diabetes but subsequently discovered to cause weight loss,
highly effective, but investors risk have met a rapturous reception from users and investors.
overestimating how fast change will But few people currently take them. Over 40% of adult
occur and how many people will Americans are obese, according to the U.S. Centers for
Disease Control, implying more than 100 million potential
take the therapies indefinitely. Some
users for the drugs. Novo Nordisk said in November that
companies regarded as victims, such fewer than 1 million Americans were taking Wegovy.
as Zimmer Biomet, may even benefit.
Contrarian investors may profit in 2024. SALES OF WEIGHT-LOSS DRUGS
MIGHT REACH $77 BILLION BY 2030
STILL ROUND, STILL AROUND
Weight-loss drug excitement went overboard in 2023.
Novo Nordisk’s Wegovy – which is known as Ozempic This number will grow. Morgan Stanley analysts estimate
when used to treat diabetes – and Eli Lilly’s Zepbound sales of weight-loss drugs might reach $77 billion by
are the first effective treatments for obesity. The flip side 2030, with over $50 billion of that in the United States,
for investors is that businesses peddling everything from making these treatments the biggest-selling drugs ever.
fast food to medical services may see demand shrink. That’s still under 15 million Americans, though, and some
Yet markets have overestimated how quickly change will of those patients may struggle to stay on the drugs and
occur. That will create an opportunity for bargain-hunters. keep weight off.
THE PROPORTION OF OBESE AMERICANS HAS EXPANDED RAPIDLY
Source: US Centers for Disease Control | R. Cyran | Breakingviews | Nov. 30, 2023
Given past rates of growth, it’s therefore likely that the GLP-1 drugs may even benefit some of the casualties of
total number of obese Americans in 2030 will still be the 2023 selloff. Zimmer Biomet, a medical device maker
higher than today. Given the harsh side effects, and the worth $24 billion in early December, saw its stock fall
likelihood that some insurers and governments will balk about 10% because two-thirds of revenue comes from
at the high cost of spending several thousand dollars selling hip and knee implants. Smaller rival Smith &
per year on treatment for each patient, investors will Nephew was also out of favor. That reaction may seem
conclude obesity will not be cured any time soon. logical, because overweight people are four times as
likely to develop arthritis in their knees.
Now consider the selloff in stocks of companies that make
products ranging from snacks to fast food and medical However, joint replacement won’t dry up any time soon.
services. Most declined in 2023. Food giant Kraft Heinz Arthritis damage is cumulative, worsening over time,
dropped 17% in the first 11 months of the year, even as the so even people who are no longer obese will still be
S&P 500 Index rose by a fifth. Yum Brands, the operator candidates for knee surgery. The number of patients
of KFC and Taco Bell, was also down. Resmed, which may even grow, as orthopedic surgeons generally
makes devices for sleep apnea, which predominantly won’t operate on morbidly obese patients. Selective
affects obese people, lost more than a quarter of its stock-pickers will find the Ozempic overshoot creates
value. At the same time, however, analysts increased opportunities to plump up their portfolios.
their estimates of 2025 revenue for all three companies.
Kim Gradwell, who has diabetes, uses an Ozempic injection needle at her home in Dudley, North Tyneside, Britain, Oct. 31, 2023. REUTERS/Lee Smithw
THE LI CLAN WILL

DEAL THEIR WAY OUT
OF VALUE TRAP
BY UNA GALANI
Hong Kong tycoon Li Ka-shing waves goodbye to journalists after announcing his retirement as chairman of CK Hutchison at a news conference in Hong Kong, China, March 16, 2018. REUTERS/Bobby Yip
The Hong Kong-based empire founded its energy assets in Canada. Shareholders are unmoved,
though. Meanwhile, Singaporean sovereign fund Temasek
by Li Ka-shing is unloved by investors. has appeared restless to unlock some of the $10 billion it
Despite his son Victor’s efforts to boost has invested in CK Hutchison’s AS Watson retail business
value, the $20 billion CK Hutchison trades and the conglomerate’s port subsidiaries.
at a big discount to its net assets. With The company’s Hong Kong listing is part of the
80% of revenue outside Greater China, it problem: global investors are out of love with Greater
makes sense to explore a sale or breakup. China equities. Indeed, some interpreted Li’s 2015
rejig as signalling a lack of confidence in the Asian
KEEP THE FAITH hub. Shareholders are also nervous about the waning
Li Ka-shing, Asia’s original tycoon, converted to shareholder influence of Hong Kong’s tycoons as China tightens its
religion nearly a decade ago when he carved up his Hong grip on the city.
Kong-based empire. Though investors supported the deal,
they have rapidly lost faith in the company as Sino-American SHAREHOLDERS ARE ALSO NERVOUS
tensions rise. Solving the value conundrum will be a top
ABOUT THE WANING INFLUENCE
priority for his son Victor Li in 2024.
OF HONG KONG’S TYCOONS
The elder Li split his empire in two in 2015 with one part,
CK Hutchison, including its global ports, telecoms, retail One option would be for CK Hutchison to shift its primary
and energy businesses and the other, later renamed listing to another exchange in Europe or the United
CK Asset, holding its China-focused property portfolio. States. The group generates 80% of its revenue outside
of Greater China. Yet turning its back on Hong Kong
Yet the move has failed to unlock any hidden value.
would risk a broader backlash.
CK Hutchison has delivered a negative 29% return to
shareholders since announcing the split, trailing the An alternative would be for the Li clan to use their 30%
negative 5% of Hong Kong’s benchmark Hang Seng shareholding in CK Hutchison to take it private with
Index. The company’s $20 billion market capitalisation is the help of a private equity group before breaking it up.
now a 70% discount to its book value, compared to par in The company has shown it’s willing to surrender control,
2016, LSEG estimates show. It trades at a paltry 5 times accepting a junior position in a merger of its Three mobile
expected 2024 earnings. telecoms unit in the United Kingdom with rival Vodafone.
It will take more bold dealmaking to unlock value at the
The executive team led by Victor Li has hardly been sitting
parent company.
still. CK Hutchison has struck telecoms mergers in the
United Kingdom, Indonesia and Australia, and rejigged First published December 2023
LI KA-SHING’S EMPIRE IS HEAVILY DISCOUNTED
Note: Price-to-book value

Source: LSEG | U. Galani | Breakingviews | Nov. 27, 2023
GREEN INVESTORS
WILL LEARN THE ART
OF STOCKPICKING
BY GEORGE HAY
A wind turbine is shrouded in fog at the Low Carbon Energy Generation Park on the Keele University campus in Keele, Staffordshire, Britain, Nov. 11, 2023. REUTERS/Carl Recine
Wind and solar stocks had a torrid As of end-November the MAC Global Index of solar
companies had fallen almost 40% in 2023 and the
2023, as stars like Orsted crashed. But iShares Clean Energy ETF had slumped nearly 30%, even
renewables investment is strong, input as benchmark European and U.S. indexes both rose.
cost inflation is abating and rates may Quarterly inflows into global sustainable funds fell from
over $180 billion globally in early 2021 to $14 billion in
have peaked. Investors able to pick
the third quarter of 2023, with funds in the U.S. recording
developers in the right sector, or suppliers actual outflows.
in the right regions, may find bargains.
In 2024, the scope for Trump to gut $369 billion of clean
GREEN LIGHT energy support from the U.S. Inflation Reduction Act
Renewable energy companies had a tough old 2023. adds another risk. Yet the long-term trajectory of green
After years of robust valuations and cheaper power costs, capital demand is up. The International Energy Agency
green stars like Danish offshore wind developer Orsted thinks clean energy investment will exceed $1.7 trillion
crashed to earth. Despite the threat posed by Donald in 2023, against fossil fuels’ $1 trillion. Solar and wind
Trump’s possible re-election as U.S. president, discerning capacity needs to rise threefold by 2030 to cap global
investors should experience a rebound. warming at 1.5 degrees Celsius above pre-industrial
levels. Equipment cost inflation may have peaked,
On the face of it, clean energy is a sector to swerve.
Bernstein analysts reckon, and the UK government
Power prices’ failure to keep pace with soaring input
recently joined Portugal and India in hiking renewable
costs meant shares in Orsted and wind turbine maker
subsidies to make project economics stack up.
Siemens Energy fell over 50% between June and the end
of November, prompting billions of dollars of writedowns
and state support.
MANY RENEWABLE STOCKS FELL SHARPLY IN 2023
Note: Rebased to zero. Invesco Solar ETF aims to track the MAC Global Solar Energy Index
Source: LSEG | A. F. Alias | Breakingviews | Nov. 23, 2023
Moreover, the single biggest driver of wind and solar Offshore wind’s high capital costs will continue to make
valuations is that their long duration creates a strong it a dicier bet than onshore solar and wind. The regulated
inverse correlation with interest rates. Anyone who thinks network arms of diversified utilities like Spain’s Iberdrola,
borrowing costs have peaked should therefore be buying Italy’s Enel and Britain’s SSE give them a hedge against
green stocks. Capital Economics reckons that if 10-year unpleasant surprises.
U.S. Treasury yields fall to the analyst’s 3.75% forecast
After reaching absurdly inflated levels in 2021, green
level by the end of 2024, stocks in renewable players
assets are relatively cheap. LSEG data as of the end
might outperform wider energy equities by 50% in the
of November suggested Iberdrola, Enel and SSE were
same period.
trading below their long-term average multiples of
forecast EBITDA. Recent results by Iberdrola and
INVESTORS NEED TO DO MORE Germany’s RWE suggest Orsted’s problems may
THAN JUST CHECK THEIR TARGET be idiosyncratic. That implies a handy entry point.
IS GREEN First published December 2023
What’s clear is that investors need to do more than just

check their target is green. Breakneck manufacturing of
cut-price Chinese solar panels risks exacerbating a supply
glut, hurting Western manufacturers like Switzerland’s
Meyer Burger Technology, who are vulnerable to falling
prices and lack protective tariffs. Solar developers,
on the other hand, might gain if the price of kit falls.
GREEN STOCKS HAVE HAD A CLOSE INVERSE LINK TO BOND YIELDS OF LATE
Note: Rebased to zero

Source: LSEG | A. F. Alias | Breakingviews | Nov. 23, 2023
STELLANTIS WILL CRUISE

WITH GM AND FORD
BY NEIL UNMACK
The maker of Jeeps and Opels run by Tavares has reason to feel a little miffed. Shares in the
roughly 60 billion euro carmaker forged from the union
Carlos Tavares is one of Europe’s lowest- of Fiat Chrysler Automobiles and Peugeot were trading
valued carmakers. Yet it generates much at just over 3.4 times its earnings for the next year in
of its income in the U.S., and boasts late November, according to LSEG. That’s marginally
above rival Volkswagen, even though Stellantis is less
industry-leading profit margins. Keeping
exposed to the highly competitive China market and
a single New York listing could see its is much more profitable.
valuation match Detroit rivals.
Yet arguably the German automaker isn’t the right peer
CHANGING LANES for Stellantis anyway. True, both have their headquarters
Stellantis will cruise alongside General Motors and Ford in Europe, with Tavares’ group based in the Netherlands
Motor. The group run by Carlos Tavares is one of Europe’s and listed in Milan and Paris. Yet Stellantis, thanks to
lowest-valued carmakers. Yet it makes most of its money Fiat’s purchase of Chrysler under former boss Sergio
in the U.S., and boasts industry-leading profit margins. Marchionne, has a large U.S. operation, with stateside
Keeping a main listing in New York could see its valuation revenues outstripping those in Europe by over 50% in
match Detroit-based rivals. the third quarter of 2023. Stellantis will make nearly
two-thirds of its operating profit in North and South
TAVARES HAS REASON America in 2024, Visible Alpha data show.
TO FEEL A LITTLE MIFFED
STELLANTIS’ EARNINGS MULTIPLE LAGS RIVALS
Note: Share price divided by 12-month forward earnings per share

Chinese Source:
battery LSEG
maker| N.
CATL’s Chief| Breakingviews
Unmack Executive Robin Zeng
| Nov. attends
28, 2023 a news conference in Berlin, Germany, July 9, 2018. REUTERS/Hannibal Hanschke
Put Stellantis alongside its U.S. competitors, and it looks attract more American investors. Tavares would hardly be
even cheaper. Ford and General Motors are valued on the first CEO to make the move: Milan-listed trucks and
average at 5 times their forward earnings. Yet Tavares’ tractors maker CNH Industrial, whose main shareholder
group is more profitable than either: in 2024 it will Exor is also Stellantis’ biggest owner, has chosen to retain
convert some 11% of its revenue into operating profit, a single listing in New York from Jan. 2.
nearly double the equivalent metric for the two U.S.
There are downsides to such a move. European politicians
players. Barclays analysts reckon Stellantis’ electric-
would resist bitterly any step that could pave the way for
vehicle division is second only to Tesla in terms of
moving Stellantis’ headquarters to the U.S. And some
profitability among Western EV players. If the European
of the prospective additional value might disappear
carmaker traded on the average 5 times earnings
once accounting changes linked to R&D are factored in.
multiple of Ford and GM, its shares would be worth
John Elkann, CEO of Exor, said in late November that
nearly 50% more.
there were no current plans to have a single U.S. listing.
One solution would be to focus on a single U.S. listing. For Tavares, spending more time talking to American
Stellantis shares already trade in New York, although investors may be an easier way to boost his company’s
they mostly change hands in Europe, RBC analysts stock. Still, if Stellantis’ valuation discount persists,
reckon. If it qualified for the S&P 500 Index, the leading pressure for more radical solutions will step up a gear.
U.S. stock market index, Stellantis would immediately
Stellantis CEO Carlos Tavares speaks during a keynote address at CES 2023, an annual consumer electronics trade show, in Las Vegas, Nevada, U.S., Jan. 5, 2023. REUTERS/Steve Marcus
ALTICE’S BEST HOPE WILL

BE A MIDDLE EAST LIFELINE
BY PAMELA BARBAGLIA
Telecoms tycoon Patrick Drahi is France, where Drahi has 24 billion euros of borrowing
coming due by 2029. The business, France’s second-
dismantling his empire to cope with a $60 largest telecoms operator, had debt equivalent to 6 times
billion debt wall. Attracting new investors trailing EBITDA in the third quarter of 2023, well above
may be tricky given low growth and a its 4.5 times target. Fierce competition saw revenue fall
1.7% in the nine months to the end of September. Some
corruption scandal. Luckily Gulf states like
Altice France bonds maturing in 2027 were yielding
the UAE and Saudi Arabia are flush with 35% in late November, according to LSEG data, a sign
cash and keen to grab Western assets. of investor concern over its debt.
LAST TANGO IN PARIS Drahi’s fix is to sell assets from his empire, which is
Franco-Israeli billionaire Patrick Drahi is facing a harsh now privately held with the exception of the listed U.S.
reversal of fortune. A $60 billion debt wall is threatening business. First on the block is Portugal, housed within the
to bring down the telecoms empire he built in an era Altice International group, the third leg outside France
of low interest rates. With soaring debt costs and a and the United States. Altice Portugal has a price tag
corruption probe, the Altice tycoon needs help to stay of more than 7 billion euros, according to a Bloomberg
afloat. Gulf investors may be his best lifeline. report. But given telecoms peers like Vodafone and
Deutsche Telekom are worth on average 5 to 6 times
Born in Morocco, the 60-year-old son of two maths
EBITDA including debt, a valuation range of 5 billion
teachers has built a telecoms group spanning the United
euros to 6 billion euros looks more likely. Drahi may
States, Europe, the Caribbean and Israel, now split into
also sell Altice International’s advertising business,
three separately funded units. The main problem lies in
worth some 1.5 billion euros, bankers say.
ALTICE FRANCE’S €24 BLN DEBT WALL
Note: Includes bonds and bank borrowings

Source: Altice France’s nine-month earnings report to Sept. 30, 2023 | P. Barbaglia | Breakingviews | Nov. 24, 2023
This fire sale may not be enough. Altice International has

debt equivalent to 5 times 2022 EBITDA, and so its own DRAHI WILL NEED TO SCOUR EVERY
creditors may be wary of seeing too much cash leak out of CORNER OF THE GLOBE FOR HELP
the business to rescue France. Drahi may therefore need
to raise equity for France directly. A 4 billion euro cash call An investment in Altice France would be a tough pitch.
would cut debt to around 5 times EBITDA, according to A corruption scandal in Portugal may not be cleared up
Breakingviews calculations. for years. And new investors would still own a stake in
Drahi would need to find a deep-pocketed anchor investor. a relatively indebted, slow-growing group. The hope is
Middle Eastern companies could fit the bill: both Abu that France may one day gain from consolidation: rivals
Dhabi’s e& and Saudi Arabia’s STC have recently built Xavier Niel’s Free, Orange and Bouygues Telecom are all
stakes in Europe’s debt-laden telecoms groups. He considering strategic options. To fix Altice, Drahi will need
would also have to secure the approval of the French to scour every corner of the globe for help.
government, given any deal would see new investors take First published December 2023
a large stake in a key part of French infrastructure. It helps
that President Emmanuel Macron has been courting Gulf
investors, and plans to appoint an ambassador to manage
relationships with sovereign funds in the region.
Altice founder Patrick Drahi attends the inauguration of the Altice Campus in Paris, France, Oct. 9, 2018. REUTERS/Philippe Wojazer
RESTAURANT DEALS
WILL BE BACK ON
THE MENU IN 2024
BY SHARON LAM
A burger and fries are pictured in Amsterdam, Netherlands, April 14, 2021. REUTERS/Eva Plevier
With the pandemic receding, U.S. Home cooks have hung up their aprons. Spending on
food away from home rose 16% year-on-year to about
spending on dining out has topped $1.3 trillion in 2022, U.S. Department of Agriculture
$1.3 trillion. Inflation has eaten into any data show. Restaurant sales rose for eight consecutive
exuberance, but as costs moderate and months through October 2023, according to a national
trade group. Yet the soaring cost of ingredients, tougher
restaurants recoup margins, dealmaking
access to capital and labor shortages restrained
will return, giving long-held investments investors’ appetites.
like Panera a shot at cashing out.
That is now unwinding. After food and labor costs rose
FEEDING FRENZY by as much as 27% in the wake of Covid-19, according
Restaurant operators will prove tasty morsels for to Morningstar, there is now some relief, with prices
acquirers in 2024. Consumer spending on dining out paid to producers for various food categories falling
has recovered from the pandemic, while the worst of its consistently through 2023 and wage inflation tumbling
inflationary after-effects are receding. That means eager to less than half its peak. And despite sluggish foot-traffic
sellers, like private equity owners stuck in investments growth this year, restaurateurs have held on to some
during a deal rout, will finally get to serve up some sales pricing power, especially in fast food, where McDonald’s
or public listings. has boasted higher prices as its restaurants’ profitability
largely recovered from 2022’s downturn.
RESTAURANT SALES ROSE FOR
EIGHT CONSECUTIVE MONTHS
US FOOD-AT-HOME VS. FOOD-AWAY-FROM-HOME SPENDING
Source: US Department of Agriculture | S. Lam | Breakingviews | Nov. 30, 2023

Taken together, these ingredients could form the perfect With interest rates topping out and markets recovering,
concoction for a resurgence in deals. Things are already acquirers – such as fellow buyout shops sitting on dry
heating up. While 2022 proved a dud, with a mere powder – could look to clean their plates. Or they could
$1.4 billion in transactions, 2023 notched 12 times join the long list of companies preparing to test investors’
that figure by September, according to Dealogic data. enthusiasm for public offerings. Panera, for instance,
Sandwich chain Subway finally found a long-sought has filed confidentially for an IPO. That should finally
$9.6 billion sale to Roark Capital in August. give restaurant owners something to feast on in 2024.
It’s a hopeful sign for others stuck in long-held First published December 2023
investments. Various private equity firms have rolled up
a slew of restaurant brands, like Brentwood Associates’
2013 deal for Lazy Dog Restaurant & Bar, or JAB’s 2017
take-private of Panera Bread for $7.5 billion.
US RESTAURANT M&A DEAL VOLUME
Note: Value of deals targeting full- and limited-service US restaurants to Q3 2023

Source: Dealogic | S. Lam | Breakingviews | Dec. 4 2023
93 REUTERS BREAKINGVIEWS | About us
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– and LinkedIn. A Ferris wheel is seen during sunset in Brussels,
Belgium, June 2, 2023. REUTERS/Yves Herman
FALLING FLAT
A tree is pictured at sunrise in the village of Rio Pardo
next to the Bom Futuro National Forest, in the district
of Porto Velho, Rondonia State, Brazil, Sept. 2, 2015.
REUTERS/Nacho Doce
BACKLASH
A steel worker of Thyssenkrupp stands amid sparks
of raw iron coming from a blast furnace at a steel
factory in Duisburg, Germany, Nov. 14, 2022.
REUTERS/Wolfgang Rattay
PICKING UP THE PIECES
Participants wearing historical costumes ride their
high-wheel bicycles during the annual penny farthing
race in Prague, Czech Republic, Nov. 5, 2022.
REUTERS/David W Cerny
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PARADIGM

3 INTRODUCTION 38 FALLING FLAT

JAY POWELL COULD

US CREDIT CARD LENDING HAS SURPASSED ITS PRE-COVID TREND

Note: Credit card loans held by US commercial banks

As for European Central Bank President Christine

MERGERS-TO-MARKET-CAP IS AT A DECADE LOW

Note: Percentages shown are not positioned to exact scale

CHINA’S HUAWEI COULD BE

HUAWEI COULD BE ONE OF CHINA’S MOST VALUABLE COMPANIES

year later, it was worth about $30 billion by December

BIG COMPANIES WILL

There’s a long history of businesspeople

GLOBAL CEO TURNOVER HAS REMAINED BROADLY STABLE

Note: Outgoing CEOs from 1,822 global companies

That would still be a risky use of Saudi resources. But

GLOBAL FIRMS ARE GROWING THEIR INDIA WORKFORCES

Note: Figures for 2023-2030 are estimates

AUSSIE TYCOON WILL

Atlassian co-CEO Mike Cannon-Brookes

ATLASSIAN RECOVERY IS CANNON-BROOKES’ ACTIVIST FUND

Source: LSEG | A. Currie | Breakingviews | Nov. 29, 2023

SCREENED OUT The rise of generative AI tools trained to mimic human

MEGA-BANK M&A GOES

EUROPEAN INVESTMENT BANKS’ LOW PRICE TO BOOK VALUE

Hoarding enough feedstock to keep up with rising

One relative laggard, in contrast to its breakneck electric

TOYOTA WILL ENGINEER

The world’s largest carmaker is playing

TOYOTA’S HYBRID SALES ARE PICKING UP SPEED

CONVERTIBLE BOND ISSUANCE COOLED DOWN POST-PANDEMIC

Note: 2023 data is through Nov. 16

Stronger issuers than fledgling and unprofitable technology

The appeal of Griffin’s hallmark trade is also rising for fund

First published January 2024

NOVARTIS AND ROCHE’S TOTAL SHAREHOLDER RETURNS SINCE 2001

Source: LSEG | A. Donnellan | Breakingviews | Dec. 1, 2023

ESPN HAS BEEN LOSING SUBSCRIBERS FOR A DECADE

MICROSOFT’S ACTIVISION DEAL LANDED IT TWO OF THE TOP 10 US MOBILE GAMES

Source: Sensor Tower | J. Saba | Breakingviews | Dec. 1, 2023

STANDARD CHARTERED’S RISING RETURN ON TANGIBLE EQUITY

POLLS MAY IMPERIL EMERGING

India and Indonesia have had a

INDIA AND INDONESIA ARE EXPENSIVE MARKETS

Note: Forward price-to-earnings ratios

AL MODELS ARE SUCKING UP EVER MORE DATA

RELX, owner of The Lancet and the LexisNexis legal

CHINA’S TOWERING MARKET SHARE IN BATTERY PRODUCTION

Note: China’s global share of production in each category

SMALLER GROCERS HAVE ALREADY BEEN SHRINKING POST-PANDEMIC,

Note: Grocers’ market share in home market

EU TECH RULES WILL CREATE

BRUSSELS’ APPROACH REGULATES

Brussels’ approach regulates access, not outcomes.

But consumers may not place the same importance as

SEARCH ENGINE MARKET SHARE IN EUROPE

Note: Data as of October 2023

The promise of global satellite broadband has drawn A FLOATING GRAVEYARD OF

What I wouldn’t say is exactly why inflation remains so